Oracle loses bid to upend HP's $3 billion win

5 minute read
Register now for FREE unlimited access to Reuters.com
  • Oracle breached pact by ending product sales for HP platform
  • Court of appeals affirms liability, amount of award
  • Oracle required to keep selling as long as HP supported platform

(Reuters) - The California Court of Appeal ruled on Monday that Oracle is on the hook for a $3 billion verdict for violating a settlement agreement with Hewlett-Packard Co by ending its development of software for use with HP's Itanium server platform.

The 2010 settlement had resolved a trade-secrets case brought by HP following Oracle's hire of its former CEO Mark Hurd, and Oracle breached a provision of the deal that required it to continue to offer its software on HP platforms "consistent with that partnership as it existed prior to Oracle's hiring of Hurd," Justice Allison Danner wrote for a three-judge panel, affirming a 2016 jury verdict.

Adam Bauer, a spokesperson for Hewlett Packard Enterprise Co -- one of the two companies that Hewlett-Packard Co split into in 2015 -- said it was "incredibly pleased" with the ruling. Hewlett-Packard was represented by a Gibson Dunn & Crutcher team led by Ted Boutrous. The firm didn't immediately respond to a request for comment.

Register now for FREE unlimited access to Reuters.com

Oracle and its attorneys including Margaret Grignon of the Grignon Law Firm and Sadik Huseny of Latham & Watkins also didn't immediately respond to a request for comment.

HP sued Oracle in California state court in 2011 for allegedly refusing to continue offering its software months after the settlement of breach and trade-secret claims based on its hiring of Hurd, who died in 2019. Judge James Kleinberg ruled for HP in 2012, finding the agreement required Oracle to continue to offer the products until HP stopped selling Itanium-based servers.

A jury in Santa Clara, California awarded HP over $3 billion in damages for breach in 2016.

Oracle argued on appeal that the relevant part of the agreement "merely restates the historically voluntary, non-contractual relationship between Oracle and HP."

But Danner, joined by Justices Mary Greenwood and Franklin Elia, said the plain language of the agreement, the parties' past course of dealing, and the circumstances surrounding the agreement required Oracle to continue to offer its products on HP's platform "as long as HP continued to sell the platform, as that practice existed before the Hurd dispute arose."

Danner also rejected Oracle's argument that the jury award wrongly included lost profits based on an expert's "speculative" opinion of HP's potential loss of market share.

The jury could consider Oracle's arguments criticizing the expert's methodology, but his evidence was still allowable, Danner said.

The trial court also didn't err in allowing the expert to base his damages opinion in part on Oracle's supposedly "constitutionally protected and privileged" statement that it would appeal the liability decision.

"Oracle's conclusory reference to the right of petition, accompanied by neither argument nor application to the facts presented, is insufficient," Danner said. "But even if we assume that Oracle's statement of intent to appeal comes within the ambit of the Petition Clause of the First Amendment, Oracle offers no authority connecting the exercise of the right of petition in the context of a breach of contract claim."

The case is Hewlett-Packard Co v. Oracle Corp, Court of Appeal of the State of California, No. H044371.

For HP: Ted Boutrous, Samuel Liversidge, Jeffrey Thomas, Rod Stone and Brandon Stoker of Gibson Dunn & Crutcher, Robert Frank of Choate Hall & Stewart

For Oracle: Margaret Grignon of the Grignon Law Firm, Fred Norton of the Norton Law Firm PC, Sadik Huseny of Latham & Watkins, Steven Ellenberg of Hopkins & Carley, and Bill Isaacson of Paul Weiss Rifkind Wharton & Garrison - who was with Boies Schiller & Flexner when he represented Oracle

(CORRECTION: A previous version of this story mispelled Ted Boutrous' last name.)

Read more:

Oracle ordered to pay HP $3 bln in Itanium case

Register now for FREE unlimited access to Reuters.com

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets. Reach him at blake.brittain@thomsonreuters.com