SAN FRANCISCO — After a three year delay, Hewlett-Packard and Oracle Corp. will finally go head-to-head next week in a contract fight with billions of dollars at stake.
The jury trial—which could stretch up to five weeks—will present a case study of how Silicon Valley business relationships go bad. It will also see appearances by big names in tech, including Oracle chairman Larry Ellison, Oracle co-CEO Safra Catz, former HP executive vice president Ann Livermore, and former Intel president and CEO Paul Otellini.
Both HP, which split into two companies last November, and Oracle have high-octane legal teams. HP is being represented by Chicago-based litigation boutique Bartlit Beck Herman Palenchar & Scott, along with Gibson, Dunn & Crutcher. In Oracle's corner is Boies, Schiller & Flexner and Latham & Watkins.
The trial in front of Judge Peter Kirwan of Santa Clara County Superior Court gets underway as Oracle is embroiled in another courtroom battle in San Francisco against Google Inc. It's deja vu for Oracle's legal team, which juggled trials in the same cases in spring of 2012.
HP and Oracle will meet in court on Monday, with both companies still trying to whittle down the evidence their opponent will be allowed to bring. Opening statements are expected on Wednesday.
How did this whole thing start?
HP sued Oracle in 2011 when the database software giant said it was backing out of a promise to continue offering versions of its suite compatible with HP servers that used Intel's "Itanium" microprocessor. That news hit HP hard, and the company now says it is owed $3 billion for lost sales and other damages as a result of Oracle's announcement.
HP has the edge as the trial begins. In 2012, another judge decided in HP's favor that Oracle was required to continue providing versions of its software for Itanium-based servers under a contract the two sides signed in 2010.
So what are they still arguing about?
The jury will have to tackle the question of whether Oracle actually breached its contract and if so, how much HP is owed. At the same time, Oracle is countersuing HP for allegedly overhyping Itanium and "bleeding" its customers and developers like Oracle for its own financial benefit. It is asking for about $90 million in damages from HP under the Lanham Act.
No one disputes that Oracle announced it would stop writing software for Itanium-based servers, but the issue is whether that announcement itself constitutes a breach, even though Oracle has continued to provide the software. Oracle also intends to appeal the decision in the first phase of the case.
If HP wins, will that help its Itanium-based business?
Probably not, according to Richard Fichera, an industry expert and principal analyst at the Cambridge, Massachusetts-based Forrester consultancy. "The fact is, Itanium is essentially dead as a server processor," said Fichera, who worked at HP from 2006 to 2010, adding that "it would have been a longer, slower death if Oracle had continued to support it."
While Intel released its first Itanium chip in 2001, it never quite lived up to the hype, and some in the industry took to calling it the "Itanic." HP's server based on the chip has still been popular because it comes installed with a proprietary operating system, HP-UX, that has performed well, Fichera said. But the industry has been gravitating back to hardware based off the "x86" processor architecture and Itanium is no longer as important to HP as it was.
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