HP Fires Back, Sues Oracle for Hiring Hurd

The computer giant files a civil complaint against its former CEO to protect its trade secrets.
Posted September 8, 2010
By

David Needle


Not so fast Oracle.

HP didn't waste much time responding to Oracle's Labor Day announcement that it had hired former HP (NYSE: HPQ) CEO Mark Hurd as its president. Tuesday, HP filed a civil complaint in California Superior Court aimed at preventing Hurd from working at Oracle (NASDAQ: ORCL).

The suit claims that by joining Oracle (NASDAQ: ORCL), Hurd will "inevitably" break the confidentiality agreement he signed to protect HP's trade secrets.

HP also noted Hurd signed the company's confidentiality agreement to protect trade secrets the past three years, most recently in February.

The news threatens to upend Oracle's plans to give its new systems business a positive jolt with the hiring of enterprise heavyweight Hurd.

"There is no executive in the IT world with more relevant experience than Mark," Oracle CEO Larry Ellison said in a statement on Hurd's appointment. "Oracle's future is engineering complete and integrated hardware and software systems for the enterprise."

Barring a settlement, a case decided in HP's favor could result in a judge enjoining Hurd from working at Oracle. In the interim, the case could drag on for months throwing Hurd's effectiveness in doubt.

"I'm not a lawyer, but on the face of it, it seems HP's complaint is valid primarily for one essential reason: Oracle's purchase of Sun Microsystems," Charles King, principal analyst with Pund-IT, told InternetNews.com. "If this had happened last year, pre-Sun, it wouldn't have surprised me if Oracle could have effectively argued that it was a close strategic partner with HP and that Mark Hurd couldn't tell them anything they didn't already know."

"But now that Oracle's in the systems business, I'm not sure what Oracle or Hurd's argument would be in terms of justifying any claim that his working there would not constitute a conflict," King added.

An Oracle spokesperson confirmed that Hurd's employment at Oracle officially began Monday, but had no further comment on HP's suit, which asks for "injunctive relief and damages" and to "enjoin Hurd from holding a position with a competitor."

The complaint said in part:

"Despite being paid millions of dollars in cash, stock and stock options in exchange for Hurd's agreements to protect HP's trade secrets and confidential information during his employment and following his departure from his positions at HP as Chairman of the Board, Chief Executive Officer, and President, HP is informed and believes and thereon alleges that Hurd has put HP's most valuable trade secrets and confidential information in peril. "

"Hurd accepted positions with Oracle Corporation ..., a competitor of HP, yesterday as its President and as a member of its Board of Directors. In his new positions, Hurd will be in a situation in which he cannot perform his duties for Oracle without necessarily using and disclosing HP's trade secrets and confidential information to others."

With the acquisition of Sun Microsystems earlier this year, Oracle is in the midst of a transition from software and services to a complete systems provider that competes with the likes of IBM and Dell as well as HP.

Hurd resigned from HP last month as part of an agreement that paid him millions in severance following the revelation that he falsified expense reports to cover up a personal relationship with an HP contractor.

David Needle is the West Coast bureau chief at InternetNews.com, the news service of Internet.com, the network for technology professionals.




Tags: Oracle, lawsuits, HP, Larry Ellison, Hurd


0 Comments (click to add your comment)
Comment and Contribute

 


(Maximum characters: 1200). You have characters left.