What began two years ago as a simple contract suit over Oracle’s hiring of former HP CEO Mark Hurd has mushroomed into a fight over the future of a line of high-end servers that HP produces. A trial set for April could ultimately lay out the ground rules for how the two Silicon Valley giants compete, rather than cooperate, in the server market moving forward.
In the latest chapter of the courtroom brawl, Santa Clara Superior Court Judge James Kleinberg on Monday dismissed fraud claims Oracle had made against HP. Those claims were central to Oracle’s effort to invalidate an agreement that the two companies hashed out to settle HP’s initial lawsuit over Oracle’s hiring of Hurd, who was fired by HP amid sexual harassment allegations. But the judge also unsealed Oracle’s complaint (which you can read here) despite HP’s objections, revealing Oracle’s allegations that HP was concealing information about its server product from the public.
In the September 2010 settlement, Oracle allegedly agreed to continue offering its software for HP’s products. HP accused Oracle of failing to live up to that promise when it announced that it was ending all software development for platforms using Intel’s Itanium processor, which is used in a major line of HP servers. Oracle counter-sued for fraud, among other things. It accused HP of concealing its plan to hire two of its adversaries, Leo Apotheker, the former CEO of SAP AG, and Ray Lane, the former Oracle chief operating officer. Oracle also alleged that HP didn’t disclose that it was paying Intel $88 million a year to prop up the Itanium chip.
Judge Kleinberg on Monday dismissed Oracle’s fraud claims on the grounds that they were covered by a California doctrine called “litigation privilege,” which bars claims for damages arising from communications made during judicial proceedings.
Oracle in a statement said it was “delighted” the judge had refused to keep its cross-complaint sealed, and had rejected “HP’s attempt to hide the truth about Itanium’s certain end of life from its customers, partners and own employees.” Oracle counsel Daniel Wall of Latham & Watkins in an interview noted the odd irony of litigating over concealed information in a sealed lawsuit. “Up until yesterday couldn’t tell people why we were suing,” he said.
As for the judge’s dismissal of the fraud claim, Wall said Oracle’s countersuit has nine other surviving claims, and becomes primarily about HP’s alleged false advertising.
HP counsel Robert Cooper of Gibson Dunn declined comment. The company, which is also represented by Bartlit Beck Herman Palenchar & Scott, said in a statement that it was pleased with the decision. “This further demonstrates the fact that Oracle breached its contractual commitment to HP and ignored its repeated promises of support to our shared customers,” the company said in the statement.