HPE Sued Oracle: Here is the Story

From the world of mergers and acquisitions to the world of law suits, HP was previously in the news for their known merger with Computer Sciences Corporation (CSC). The most recent activity regarding HPE is their lawsuit against Oracle. HPE and Oracle have had a long-standing relationship for over three decades. Things considerably changed when Oracle bought Sun Microsystems in January of 2010. This buyout resulted in Oracle becoming a direct competitor of HP in the hardware division. This is also when the lawsuits between HPE and Oracle erupted. HPE stated that Oracle “breached a clear contractual obligation to HPE and acted in bad faith, with the intention of driving hardware sales from HPE’s Itanium to Oracle’s Sun servers.” Oracle had agreed on the software development for Itanium, a chip that HPE is dependent on for its selective servers. Oracle decided to stop developing software for use with HPE’s Itanium-based servers in 2011. Oracle claimed that Intel made it clear that the chip was nearing the end of its life and was shifting its focus to its x86 microprocessor. HPE said it had an agreement with Oracle that support for Itanium would continue, without which the equipment using the chip would become obsolete.

There has been bad blood between the two companies for a while. It started when Oracle hired HPE’s former Chief Executive Officer (CEO) Mark Hurd and appointed him as the Co-President. HPE was incredibly unhappy about this; they filed a lawsuit claiming “irreparable damage” as it was believed that Hurd would provide “valuable trade secrets” to Oracle. The two companies ended up mutually settling regarding the ‘trade secret’ lawsuit. On June 1, 2016, HPE asked Oracle to pay $3 billion in compensation for causing a fall in the demand for its Itanium-based offerings. This isn’t the first go-round of lawsuits for Oracle. About a month ago, Oracle lost a $9 billion verdict to Google while trying to stake a claim to the search giant’s Android phone business. This $3 billion award for HPE will account for 5.4 percent of Oracle’s $56 billion cash on hand, according to data collected by Bloomberg. It has been noted that HP is extremely happy with this verdict and that Oracle plans to appeal.

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