HP tells court Oracle owes billions over breach of contract

HP and Oracle made opening statements yesterday in a trial that could see Oracle paying out billions for what HP claims is a clear breach of contract.

HP says Oracle violated a contract between the two companies when Oracle decided to discontinue development of its database software for HP's Itanium-based servers.

Without continued support from Oracle, HP said, the equipment running on Intel's Itanium chip will become useless.

Oracle, meanwhile, claims that there was no contract concerning their support of Itanium-based servers, and that the "brief, breezy" language cited by HP does not apply to the case at hand.

Was there a contract between HP and Oracle?

Instead of being decided by a jury, the first phase of the case will be determined solely by Santa Clara Superior Court Judge James Kleinberg.

Judge Kleinberg will determine whether or not a contract between HP and Oracle exists.

If he determines there is a contract, a jury will then decide whether Oracle violated it.

HP claims that the agreement with Oracle to continue developing database software for HP's Itanium-based servers was reaffirmed during a 2010 settlement concerning former HP chief executive Mark Hurd's transition to working at Oracle.

"'HP is trying to force Oracle to support a technology, Itanium, that Oracle does not believe in,' according to Oracle's lawyer."

At the time, said HP board member and former HP enterprise chief Ann Livermore when she took the stand on Monday, HP was concerned that Hurd was going over to Oracle "with ill will toward HP."

"My concern was he knew our financials. He knew our dependence on Itanium. He knew lots and lots of things," she said.

But after the case was settled, she said, Oracle assured HP that Oracle's software sales will continue to be "platform neutral."

Similarly, HP lawyer Jeffrey Thomas said on Monday that the Hurd settlement required Oracle to continue to offer HP its "best products," which HP claims will require Oracle to continue to support its existing products.

Oracle's response

Oracle disagrees. Their lawyer Dan Wall claimed the Hurd settlement was concerned solely with the employment litigation at hand, and that negotiations had nothing to do with their business partnership.

Oracle claims that Intel has made it clear that the Itanium chip will soon be obsolete and that Intel will instead focus on the x86 microprocessor moving forward.

"HP is trying to force Oracle to support a technology, Itanium, that Oracle does not believe in," Wall said.

Livermore's testimony continues today.

Via Bank Tech