Oracle could be facing a multi-billion dollar payout after a judge ruled it must continue to develop software for HP’s products that use Itanium processors.
HP sued Oracle for breach of contract after Larry Ellison’s firm announced in March 2011 it would stop development of its software for Itanium systems, believing those products to be nearing the end of their lifecycle. However the judge in the case has decided that as long as HP is producing Itanium systems, Oracle must continue to support it.
Judge James Kleinberg said an agreement reached between Oracle, HP and Mark Hurd in September 2010 was still legally binding. That agreement was made as part of Hurd’s controversial move to Oracle, following his departure from HP.
The two companies will return to the California court later in August, where damages will be discussed. It is thought HP’s compensation demands could run into billions of dollars. The company blames a slump in sales of its Itanium-based systems on Oracle’s original withdrawal of support.
Oracle has already indicated it will appeal the decision, claiming that it still believes the Itanium processors, jointly developed by HP and Intel, are nearing the end of their life.
"Last March, Oracle made an engineering decision to stop future software development on the Itanium chip," the statement read. "We made the decision as we became convinced that Itanium was approaching its end of life and we explained our rationale to customers."
"Nothing in the Court’s preliminary opinion changes that fact. We know that Oracle did not give up its fundamental right to make platform engineering decisions in the 27 words HP cites from the settlement of an unrelated employment agreement. HP’s argument turns the concept of Silicon Valley ‘partnerships’ upside down. We plan to appeal the Court’s ruling while fully litigating our cross claims that HP misled both its partners and customers," Oracle said.
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HP however was jubilant at the court’s decision. "Today’s proposed ruling is a tremendous win for HP and its customers. The Superior Court of the State of California, Santa Clara County, has confirmed the existence of a contract between HP and Oracle that requires Oracle to port its software products to HP’s Itanium-based servers. We expect Oracle to comply with its contractual obligation as ordered by the Court," a statement said.
There is no love lost between these two Silicon Valley giants. Oracle founder and CEO Larry Ellison launched a scathing attack on HP’s board after Mark Hurd’s departure, claiming they had made the "worst personnel decision since the idiots on the Apple Board fired Steve Jobs many years ago."
Shortly after this it was announced Hurd would be joining Oracle as president. That decision angered HP, who went to court to stop that from happening. The three parties eventually came to an agreement that allowed Hurd to join his friend Ellison at Oracle.
Oracle has also been involved in a lengthy court case with Google of Java code used in the Android mobile operating system. Recently Google was cleared of most of copyright infringement charges, but was found guilty of using up to nine lines of code from Java in Android. Oracle agreed to accept $0 in damages so that case could move to the appeals process, it was announced.
