HP, Oracle clash over software partnerships in closing trial arguments

A judge is expected to rule on Oracle's obligations to HP's Itanium server platform next month

Lawyers for Hewlett-Packard and Oracle argued opposite views of independent software vendors' obligations to hardware makers on Tuesday in the closing arguments of a lawsuit over Oracle's decision to stop porting its products to HP's Itanium platform.

The so-called Hurd Agreement that the companies signed in 2010, in which they said they would keep working together as they had before they clashed over former HP CEO Mark Hurd, committed Oracle to continue porting new versions of its database and other software to Itanium, said Jeff Thomas, HP's lead attorney in the case.

Not so, according to Oracle's attorney, Daniel Wall. As an ISV (independent software vendor), Oracle had the discretion to stop porting software to Itanium before the Hurd Agreement, and if that deal called for going back to the status quo, they were still free to end the porting.

The closing arguments before Judge James Kleinberg of Santa Clara County Superior Court were the last court appearance in the case before the judge rules on whether the companies made a binding contract on Itanium porting. If he decides they did, a jury will decide whether Oracle breached the contract. Post-trial briefs from both sides are due July 16, and the judge's decision is expected shortly after that.

HP sued Oracle in June 2011, following Oracle's announcement in March 2011 that it would not sell future versions of its software for Itanium, a chip architecture that HP developed with Intel for mission-critical servers. Oracle said it made the decision because it learned from Intel that HP was secretly planning to phase out Itanium. HP makes almost all the servers that use Itanium chips.

But the tension between the companies may have begun more than a year earlier, when Oracle began competing against HP's hardware business through its acquisition of Sun Microsystems. Then, the companies butted heads when HP fired Hurd as its CEO and Hurd joined Oracle as co-President just a month later. HP sued Hurd, claiming he would use inside knowledge against his former employer. The Hurd Agreement was crafted in an attempt to heal the rift between the companies and was announced on Sept. 20, 2010.

Since then, the animosity between the companies has grown even deeper. Shortly after the Hurd deal, HP hired former Oracle executive Ray Lane and former SAP chief Leo Apotheker, both well-known enemies of Oracle. HP also said Oracle was dropping Itanium support in order to push Itanium users onto its own hardware platforms.

In his closing argument for Oracle on Tuesday, Wall said ISVs are called independent because they can follow their own business interests when they decide what platforms to write software for. The fact that Oracle had sold products for Itanium for 10 years didn't create a permanent obligation, he said.

"None of this is done to please any partner. It is done because there is money to be made," Wall said. If HP had wanted a porting contract with Oracle, it should have negotiated one, as the two companies did in an agreement on Oracle's E-Business Suite, he said.

HP's lawyer said Oracle and HP did agree to specific terms for the Hurd Agreement, including an Itanium porting commitment, but Oracle wanted the language in the final document to remain general.

Oracle ported its software to Itanium for years with no contract and encouraged HP to rely on its software, Thomas said. During the trial, HP said about 80 percent of Itanium customers run Oracle software.

"When that relationship seemed to be in doubt or in danger ... HP asked Oracle to put those assurances into a formal, binding contract, and Oracle agreed to do that," Thomas said.

Days of testimony over the past month, some of it recounting emotional confrontations over http://www.pcworld.com/businesscenter/article/256813/hp_oracle_clash_over_what_their_hurd_deals_wording_means.html, Oracle's porting announcement, and other events, came down in the end to how the final wording in the Hurd Agreement was reached. HP's argument returned frequently to an email message sent by Oracle Chief Counsel Dorian Daley during the negotiations that referred specifically to Itanium porting. HP said Oracle never retracted that statement. Oracle said its co-President, Safra Catz, never made a commitment to porting and explicitly rejected the idea during talks with then-HP enterprise chief Ann Livermore. Catz has called the companies' re-affirmation of their partnership nothing more than "a corporate hug."

Much is at stake for the companies in addition to the tens of thousands of customers they serve together and the billions of dollars in annual revenue those customers represent. HP's Itanium, and the Solaris server platforms that Oracle acquired when it bought Sun Microsystems in early 2010, are high-end systems designed for marquee clients in government and private enterprise.

HP is seeking unspecified damages as well as an order forcing Oracle to do three things: Continue porting to Itanium all the products it was offering for the platform before it hired Hurd, keep porting new versions of the software to Itanium until HP stops selling that line of servers, and not charge HP for the porting.

Oracle has filed a counterclaim in which it says HP hid its plans to phase out Itanium and defamed Oracle by saying the company's charges about Itanium weren't true.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

Copyright © 2012 IDG Communications, Inc.

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