Oracle Ordered To Pay HPE $3 Billion In Long-Running Itanium Dispute

A California jury has ordered Oracle to pay Hewlett Packard Enterprise $3 billion in damages in the long-running dispute between the two companies over Oracle's software support for HPE's Itanium servers.

Oracle, which has argued for years that the Itanium processor used in the servers is obsolete, vowed to appeal the verdict.

Dave Butler, president of Enterprise Computing Solutions, a Mission Viejo, Calif.-based solution provider and long-time HPE channel partner, commended the jury for blockbuster ruling.

"We don't do Itanium now, but it used to be 90 percent of our server business for Oracle and SAP," he said. "When Oracle decided to no longer support Itanium, customers had to move to IBM AIX or Sun Microsystems, which Oracle then bought. So the ruling is a just reward for HPE."

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When Oracle pulled support for HPE's Itanium server technology, many HPE partners had to replace the Itanium-based servers with Xeon-based servers, Butler said.

"Luckily, we were able to transition our business to the Intel business-class server platform," he said. "It filled the gap. And the Intel technology has gotten much stronger over time."

In March 2011, Oracle announced it would stop developing its software for the Itanium server chip, manufactured by Intel and used by Hewlett-Packard to power its Integrity Unix servers. HP was the only major server company still manufacturing Itanium-based servers. At the time, Oracle argued that Itanium was nearing the end of its life.

HP sued Oracle in June of that year, claiming that Oracle was contractually obligated to continue supporting Itanium. Two months later, Oracle countersued, charging HP with fraud and defamation in the case.

Oracle went so far as to charge in a court filing that HP was secretly paying Intel to keep producing the Itanium processors to maintain the appearance to customers "that a dead microprocessor is still alive," and famously called HP's efforts "a remake of 'Weekend at Bernie's,'" the 1989 film in which the lead characters drag around the body of their murdered boss in an effort to convince people he's still alive.

The legal battle came at a time when tensions between HP and Oracle, once allies, were rising. Oracle acquired Sun Microsystems in 2010, instantly putting Oracle in competition with HP in the computer hardware arena. Also in 2010, Oracle hired Mark Hurd, HP's former CEO, as its president.

Two years later, California Superior Court Judge James Kleinberg ruled against Oracle, saying the company was contractually committed to continue developing its software for Hewlett-Packard's Itanium-based servers.

This month, a trial was held in the same court, in Santa Clara County, to determine damages in the case and on Thursday, a jury, after five hours of deliberations according to a Bloomberg report, ordered Oracle to pay HP (now Hewlett Packard Enterprise) $3 billion in damages.

Late Thursday, Oracle issued a statement, attributed to executive vice president and general counsel Dorian Daley, saying that "two trials have now demonstrated clearly that the Itanium chip was nearing end of life, HP knew it, and was actively hiding that fact from its customers."

The company went on to say that it has been providing its software for Itanium since Judge Kleinberg's 2012 ruling "while HP and Intel stopped developing systems years ago." (HP argued that the damage was done with Oracle's original decision to halt development.)

Oracle said it intends to appeal both Kleinberg's original ruling and this week's damages ruling by the jury.

"HP is gratified by the jury's verdict, which affirms what HP has always known and the evidence overwhelmingly showed," John Schultz, executive vice president and general counsel of Hewlett Packard Enterprise, told Reuters in an e-mailed statement, saying that Oracle's decision to stop the software development "was a clear breach of contract."