H-P: Oracle Violated Contract in Server Dispute

Published June 04, 2012

| Reuters

Oracle Corp violated a clear contract with Hewlett-Packard Co when it decided it would no longer make new versions of its database software compatible with HP's Itanium-based servers, a lawyer for HP said in court.

The two technology companies faced off on Monday for opening statements in a bitter lawsuit over Oracle's decision to end support for Itanium.

The trial, in which HP seeks up to $4 billion in damages, comes just days after Oracle lost a separate high-stakes case against Google Inc over smartphone technology.

Oracle decided to stop developing software for use with Itanium last year, saying Intel made it clear that the chip was nearing the end of its life and was shifting its focus to its x86 microprocessor.

But HP said it had an agreement with Oracle that support for Itanium would continue, without which the equipment using the chip would become obsolete. HP said that commitment was affirmed when it settled an earlier lawsuit over Oracle's hiring of ousted HP chief executive Mark Hurd.

In court on Monday, HP lawyer Jeffrey Thomas said the Hurd settlement clearly bound Oracle to continue offering its "best products" to HP.

As a sign of the importance of the contract, top executives from both companies -- including Oracle President Safra Catz and then-HP enterprise services chief Ann Livermore -- negotiated the deal, Thomas said.

"It is impossible to offer best products going forward without porting new versions of those products," Thomas said.

Oracle, meanwhile, says HP's claims "cannot support" its damages estimate, and has countersued HP for false advertising, asserting that HP failed to disclose the terms of its contract with Intel.

Lawyers for Oracle are expected to begin opening statements later on Monday.

Instead of a jury, Santa Clara Superior Court Judge James Kleinberg will decide the first phase of the trial -- namely, whether there is a contract between HP and Oracle, and its terms.

If Kleinberg decides in HP's favor, then a jury will decide whether Oracle violated the contract, and damages.

In court last month, Kleinberg compared the case to a divorce, saying "this case appears to be the end of a marriage" between the technology giants.

Top personalities from both Oracle and HP could take the stand, with HP's Livermore, who is now a board member, set to testify first.

Intel Corp is not a party in the lawsuit, although its CEO, Paul Otellini, might also testify.

Shares of HP were down 1.4 percent at $20.96 in afternoon trading, while Oracle rose 0.3 percent to $267.07.

The case in the Superior Court of the State of California, County of Santa Clara is Hewlett-Packard Company v. Oracle Corporation, No. 11-CV-203163.

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