HP Tells Judge Oracle Was Under Contract to Support Chip

Oracle Corp. last year reneged on its contractual obligation to develop software for Hewlett- Packard Co. (HPQ) servers, a lawyer for Hewlett-Packard told a California judge at the end of a trial.

Attorney Jeff Thomas told Judge James P. Kleinberg in San Jose that Hewlett-Packard’s interpretation of the contract is “completely in line with” the language of the final agreement the companies reached over Mark Hurd’s transition from chief executive officer of Hewlett-Packard to co-president of Oracle. Oracle co-President Safra Catz’s testimony that she told a Hewlett-Packard vice president that Oracle refused to make such a commitment is inconsistent with e-mail evidence in the case, Thomas said.

“For years, Oracle led HP to believe it would continue to make the products available,” Thomas told the court. “When that relationship seemed to be in doubt or danger” because of Hurd’s departure, “HP asked Oracle to put those assurances in a binding contract,” and Oracle agreed, he said.

Hewlett-Packard, based in Palo Alto, California, seeks a court order requiring Oracle to continue developing software for its servers that run on Intel Corp. (INTC)’s Itanium chips and about $500 million in damages, according to a person familiar with the matter.

Without such an order, Hewlett-Packard estimates it should be awarded more than $4 billion in damages, based on an extrapolation to 2020 that accounts for projected losses, said the person, who didn’t want to be identified because the court document containing the damages request is confidential.

Closing Arguments

Lawyers made closing arguments today in the conclusion of the first phase of the trial, which started June 4. Kleinberg must determine whether Oracle is contractually obligated to continue developing software for Hewlett-Packard’s Itanium-based servers. If so, a jury will determine in a second phase whether Oracle broke the contract and what, if any, damages should be awarded.

Oracle, based in Redwood City, California, denies Hewlett- Packard’s claims, arguing that the two sentences at issue in the agreement don’t require Oracle to forfeit what software it can develop and what price it can charge.

Dan Wall, a lawyer representing Oracle, told the court that Hewlett-Packard’s lawsuit is an “assault” on the normal business practices of two sophisticated companies.

‘Single Word’

The agreement at issue doesn’t contain “a single word about future software,” and Hewlett-Packard failed to show evidence of any Oracle employees saying “we will continue to port our future software” to the HP platform, Wall said.

“Oracle and HP don’t have any such forward-porting agreement,” Wall said. “HP never made any serious effort to get one,” and has resorted to litigation, a “skillful use of e-emails and other documents to make it appear there was a porting agreement that manifestly does not exist.”

Thomas cited a Sept. 12, 2010, e-mail presented at trial from Oracle General Counsel Dorian Daley to lawyers drafting Hurd’s settlement agreement, which refers to a conversation between Catz and Ann Livermore, who was then a Hewlett-Packard vice president.

“Ms. Catz and Ms. Livermore did not discuss anything more than an agreement to continue to work together as the companies have -- with Oracle porting products to HP’s platform and HP supporting the ported products and the parties engaging in joint marketing opportunities -- for the mutual benefit of customers,” Daley wrote in the e-mail.

Phone Conversation

Thomas said the e-mail contradicts Catz’s testimony that in a phone conversation with Livermore about the Hurd agreement, Catz emphatically rejected Hewlett-Packard’s request that Oracle commit to continue developing its software for servers running on the Itanium chip.

Catz’s testimony “obviously leads one to doubt what was said in that Catz-Livermore conversation,” Thomas told the court.

The testimony of Livermore and Catz that Thomas relied on doesn’t amount to a “material conflict,” Wall said.

“Whatever the conflict is, neither one of them is claiming that the two of them talked about it and agreed to port” Oracle’s software to Hewlett-Packard’s platforms, Wall said.

Kleinberg asked the lawyers to file additional documents supporting their cases by July 16, and said he’ll rule on the first phase afterward. He didn’t give a specific date for his ruling.

The case is Hewlett-Packard Co. v. Oracle Corp. (ORCL), 11- cv-203163, California Superior Court, Santa Clara County (San Jose).

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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