A vitrolic court battle between Hewlett Packard and Oracle over Intel’s Itanium platform and HP’s ex-CEO Mark Hurd took a turn in HP’s favour Monday, when a judge dismissed Oracle’s fraud claim against the company.
The saga begun last year, when Oracle discontinued its support for Intel’s Itanium platform – a platform jointly developed by HP and Intel in the late 90s – claiming it had received word from the chip-maker that the end was nigh for the platform.
This lead HP, whose server line is powered by Oracle’s software and runs on Itanium chips, to sue Oracle alleging this play was “anti-customer” and a breach of agreement.
Oracle countered, alleging that Intel only developed and supported the chip because it was paid to do so by HP. Oracle quoted an internal HP document which said the roadmap for Itanium was “more of an illusion than of technical significance.”
In November 2010, Oracle purchased Sun Microsystems giving it control of Sun’s lucrative SPARC hardware business. Sun’s SPARC servers compete directly against HP’s Oracle powered server line. Oracle alleges HP’s strategy was to take away business from Oracle Sun, and to “reap lucrative revenues from the locked-in Itanium customer base using HP’s HP-UX operating system on Itanium servers”.
According to court filings, payments from HP to Intel totaled $440 million under an agreement signed in 2008 between the companies. In 2010 that deal was extended to more than $250 million.
Intel refused to comment at length on the proceedings.
“Intel’s work on Itanium processors and platforms continues with multiple generations of chips currently in development,” a spokesperson for the company said. “We remain firmly committed to delivering a competitive, multi-generational roadmap for customers using HP-UX and other operating systems that run the Itanium architecture.”
In late August 2011, the New York Post reported on rumours that Oracle was considering a takeover of HP. This would have allowed Oracle to better position itself against market leader IBM.
Last December, Oracle counter-sued HP claiming fraud, defamation, intentional interference with contractual relations, as well as violation of the Lanham Act and two violations of the California Business and Professional Code.
“HP engaged in a multi-year campaign of secrecy and deception designed to conceal the truth about Intel Corporation’s commitment to the Itanium microprocessor in order to extend its Itanium server business at Oracle’s expense and reap large profits from its own unsuspecting installed base of Itanium users,” Oracle lawyers wrote in the brief sent to Judge James Kleinberg of the California Supreme Court in December.
Oracle claims of fraud were centered around allegations that HP had acted fraudulently by withholding information from Oracle when the two firms entered into the “Hurd Agreement”. This agreement was reached after HP sued Oracle for hiring its former CEO, Mark Hurd. Before Mr. Hurd was appointed to be the co-president of Oracle, he served as the CEO of HP until August 2010 when he was resigned after a sexual harassment inquiry found he had filed inaccurate expense reports.
Oracle said it never would have entered into the Hurd Agreement if it had known about these issues with Intel, hence the allegations of fraud.
In a 21-page ruling released Monday, Judge James Kleinberg ruled against Oracle’s fraud claims, saying that the “alleged fraud did not prevent Oracle from participating in the negotiations” between the two companies to settle the issues over Oracle’s hiring of Mr. Hurd “or deprive Oracle of the opportunity to negotiate.”
HP said in a press release that it was “pleased” the court had ruled in its favour in rejecting Oracle’s attempt to use a fraud claim to nullify its contract with HP.
“We look forward to seeing the facts made public that demonstrate how Oracle’s March 2011 announcement to no longer develop software for Itanium servers was part of a calculated business strategy to drive hardware sales from Itanium to inferior Sun servers,” an HP spokesperson said in a statement celebrating the company’s victory.
Although Oracle’s fraud claim has been dismissed, the legal battle between the two companies is far from over. The two are due back in court in April to continue the fight.
Oracle claimed it was “delighted” with the court ruling that rejected HP’s attempt to “hide the truth” about Itanium’s certain end of life from its customers, partners and own employees.
“We look forward to seeing all of the facts made public that demonstrate how HP has known for years that Itanium is end of life,” the company said.
