Oracle fires Itanium countersuit at HP

Right back at you, Leo Meg

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Late Friday, Oracle filed a countersuit against HP, which sued Oracle back in June because Oracle said in March that it would not be developing future releases of its database, middleware, and application software on future Itanium processors.

It's hard to tell who is stretching the truth more it in the ongoing lawsuit, and now countersuit, between Hewlett-Packard and Oracle over the fate of the Itanium processor from Intel. The reason is that the court documents coming out describing the situation are heavily redacted, with all the juicy bits that might offer some clarity being blacked out.

In the amended cross-complaint filed last Friday, which was posted on the Scribed document sharing site here, Ellison & Co's lawyers are slapping back at HP with seven counts, including charges of fraud, defamation, intentional interference with contractual relations, intentional interference with prospective economic advantage, as well as violation of the Lanham Act and two violations of the California Business and Professional Code.

"HP engaged in a multi-year campaign of secrecy and deception designed to conceal the truth about Intel Corporation's commitment to the Itanium microprocessor in order to extend its Itanium server business at Oracle's expense and reap large profits from its own unsuspecting installed base of Itanium users," Oracle lawyers wrote in the brief sent to Judge James Kleinberg of the California Supreme Court in Santa Clara.

"When Oracle announced the truth about Itanium – that Intel’s strategic focus was not on Itanium but on its competing Xeon line of microprocessors, and that Itanium was nearing its end of life – HP reacted with a ferocious effort to foment false customer outrage and to vilify and defame Oracle, all to buy itself more time to milk its customer base and falsely blame Oracle for Itanium's demise."

Oracle says that in the process of document discovery in the Itanium case, it stumbled upon an agreement whereby HP is paying Intel to keep the Itanium processor alive – something Oracle says it did not know when it made the decision to pull software support from the future Itanium processors back in March. Oracle's beef is that this revised "Itanium Collaboration Agreement" was done secretly, without partners or customers being told what the deal is.

"There is, of course, nothing wrong with entering into a contract with a supplier to ensure the supply of a key input," Oracle said in its countersuit. "Had HP simply entered into the Intel deal and revealed it – perhaps taken credit for it – Oracle would have nothing to complain about." Oracle contends that "Intel desperately wanted out of Itanium" and that this as well as the HP agreement to essentially pay Intel to keep the Itanium roadmap alive was something that it was entitled to as an HP and Intel partner and that HP's customers (who are often users of Oracle's software as it turns out) are similarly entitled to.

By torpedoing the Itanium platform, Oracle can sink a big portion of HP's enterprise systems profits, which come from HP-UX system sales and support contracts. Oracle has shown no love to HP since it acquired the Sun Microsystems hardware and operating system business and it got worse when HP fired Larry Ellison's tennis buddy, Mark Hurd, as CEO.

It got even worse when HP hired former SAP CEO Leo Apotheker to replace him and former Oracle president Ray Lane to be its chairman. Once Hurd came into Oracle as co-president, it was a matter of months before the gloves were off. Whatever the legal, technical, or market merits of Oracle's moves with regard to Itanium, the intended effect has been realized: HP's Unix business is shrinking. Then again, so is Oracle's Unix business, as the latest Gartner server figures show. So far, IBM seems to be the big winner in the tit-for-tat legal spat between these two companies.

Oracle is also filing its countersuit against HP because it says that it was fraudulently induced into entering in an agreement that allowed it to hired Hurd after he had been let go from HP. It claims that HP concealed and misrepresented the "truth about Itanium" and concealed "material information" that it was about to hire Apotheker and Lane to run the company.

Oracle also reminded everyone that HP tried to add clauses to the Hurd agreement that would guarantee HP's access to Java, its ability to sell Solaris on x86 platforms, and ongoing support from Oracle for its software stack on HP-UX. This language was struck from the commitment reaffirmation portion of the Hurd agreement, and in a draft supplied by Oracle, all that was left was this:

"Oracle and HP reaffirm their commitment to their longstanding strategic relationship and their mutual desire to continue to support their mutual customers. Oracle will continue to offer its product suite on HP platforms and HP will continue to support Oracle products (including Oracle Enterprise Linux and Oracle VM) on its hardware in a manner consistent with that partnership."

The actual Hurd agreement remains under seal, so we don't know what it says. But this portion of the agreement, however it was worded, is the clause in the agreement that HP's lawyers are arguing is a commitment by Oracle to continue to support its software on HP-UX/Itanium machines made by HP. Oracle is seeking a recission of the Hurd hiring agreement in its countersuit.

Incidentally, Oracle's countersuit says that HP's allegations in its lawsuit from June that Oracle is withholding support to current Itanium customers on current Oracle software is "utterly false" and that "Oracle is fully supporting the current (and many past) versions of its software on Itanium servers, by issuing bug-fixes per its standard policies."

In the wake of Oracle's countersuit, HP put out a lengthy statement of its own.

Interestingly, in the week before the Hurd hiring agreement was signed on September 20, HP says that Oracle's general counsel wrote in an email that this provision was "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."

While much remains murky in this suit and countersuit, what seems clear at this point is that we are going to have a Bill Clinton verb definition moment like that during the ex-President's impeachment. It will all depend on what the definition of the word "support" is.

Oracle will no doubt argue that it is continuing to support HP-UX and Itanium with current and prior releases of its database, middleware, and application software. HP will no doubt argue that what the clause meant was that Oracle would continue to port future releases to future Itanium chips and HP-UX releases.

HP continues to contend, and reiterated in its statement, that Oracle wants to move Itanium server customers to its own Sun systems and that the "tactics employed by Oracle in support of this purpose included pricing misconduct, withholding of benchmarking scores for HP servers run on Oracle software, and abusing customers on support issues."

The HP-Oracle lawsuit is scheduled for trial on April 2, 2012, and will also probably have both sides arguing about how long a proper server chip roadmap needs to be so it is not at "end of life," and what it means if HP is indeed paying Intel to keep the Itanium chip alive. It will be interesting to see what that is costing HP and how long that commitment term is for, if it turns out to be true. ®

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