This story originally appeared in sibling publication The Recorder.
Just days after a major loss in its epic battle with Google over software for mobile phones, Oracle faced off with another tech giant Hewlett Packard. But, this time Oracle was at the defense table.
HP’s counsel promised Santa Clara County Superior Court Judge James Kleinberg Monday that evidence would show that the cozy corporate relationship the two tech titans enjoyed for decades soured when Oracle violated a deal they had by announcing it would stop supporting its database software for HP’s Itanium-powered Integrity servers.
The agreement at the center of the dispute was signed by HP and Oracle executives in 2010 during a particularly tumultuous period of their relationship the weeks after Oracle announced it hired disgraced HP CEO Mark Hurd to be its co-president and was part of a settlement of an employment suit brought against Hurd.
In the first bench phase of the trial in Santa Clara Superior Court, HP is asking Kleinberg to find that the settlement agreement amounts to a contract requiring Oracle to continue to offer the newest iterations of its software to HP for use on its servers. Eighty percent of those servers run on Oracle database software.
HP is trying to “force Oracle to support a technology it doesn’t believe in,” Daniel Wall, the Latham & Watkins partner representing Oracle, said in his opening.
HP’s Integrity line of enterprise servers represent about one third of the so-called “mission critical” server market. Itanium servers generated nearly $4 billion in revenue for HP in 2011, according to HP board member Ann Livermore, who testified Monday.
Gibson, Dunn & Crutcher partner Jeffrey Thomas, who is representing HP, said that “many promises” had been made by Oracle over the years to keep the Itanium relationship healthy. Livermore, during her testimony, said that HP “made that [80 percent software-adoption rate] happen” by working closely with Oracle engineers on research and development, marketing and support. The fact that HP’s Integrity servers were number two in the marketplace, she said, was also made possible by the companies’ joint efforts.
But those previous successes didn’t prohibit Oracle from announcing its plans to stop offering new versions of its database software on Itanium hardware, said Wall. And, Wall added, the “brief and breezy” settlement agreement did not preclude Oracle from making an independent decision to move on to new hardware choices.
“We’re here because we don’t believe in Itanium,” said Wall. It’s “gone the way of the dinosaur.” Although Wall acknowledged that HP and Oracle were partners, he added a caveat — partners “in the Silicon Valley way.” Nothing about the partnership was “legally binding,” he said.
HP claims that the settlement agreement reaffirmed the companies’ partnership and Oracle’s commitment to continue to enable its software to run on HP’s flagship Integrity line of servers.
But, according to Wall, the agreement was not nearly as sophisticated as any software sharing agreement would normally be, telling Kleinberg that the executives at Oracle in charge of the agreement’s negotiations couldn’t execute a software porting agreement “on a dare.” Moreover, he said, the agreement is missing the hallmarks of a porting contract: scope, duration, terms and remedies.
Thomas, however, said the companies had shared technology many times over many years without payment or contracts. Thomas also made repeated mention of the closeness between HP and Oracle, citing several times the fact that HP engineers would regularly work on Itanium with Oracle engineers on-site at Oracle.
“We had a rhythm,” testified Livermore.
Livermore is scheduled to continue her testimony Tuesday morning.
