Hewlett-Packard (HP) and Oracle have finally begun what will likely be a long court battle about Oracle’s support refusal to support HP’s Itanium-based servers. HP and Oracle were once so close the companies informally discussed merging, but that all changed last year in March. However, things began to erode even earlier in 2010 after Oracle acquired Sun Microsystems and HP’s former CEO Mark Hurd.

Six months later, Oracle announced it was discontinuing software development for Intel’s high-end Itanium chip, which never gained traction in the market – except with HP. Oracle claimed HP was clinging to an outdated technology  and that the Itanium processor was on its way to the grave. Obviously, HP did not agree, and hurled accusations that Oracle was being anti-competitive and trying to bolster its newly acquired hardware business.

Oracle refused to reverse its decision, and HP took its case to court last June. In December, their very public disagreement continued with HP claiming to anyone that would listen that Oracle was violating contractual obligations to support Itanium. Oracle in return claimed that they had been tricked in hiring Hurd, and that HP deliberately hid their plans of hiring for SAP leader and long-time Oracle foe Leo Apotheker as CEO. Oracle also alleged that HP was paying Intel $88 million a year to continue manufacturing its Itanium chip. In January, a San Jose judge ruled in favor of HP and dismissed Oracle’s claims.

Now, over a year later the core case is finally being tried, only days after Oracle lost its battle with Google. HP is seeking a court order requiring Oracle to continue developing software for its servers and around $500 million in damages. If the court does not grant an order, HP wants $4 billion in damages, its projected losses for the 2020 accounts that would be lost.

The Trial Breakdown

The complex trial will occur in phases. The first phase of the trial is scheduled to last three weeks, and the judge must decide if Oracle is truly contractually obligated to continue developing software for the Itanium-based servers. HP is basing its position on the clause in Hurd’s employment release, which stated,

“Oracle and Hewlett-Packard 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 Hewlett-Packard platforms, and Hewlett-Packard will continue to support Oracle products, including Oracle Enterprise Linux and Oracle VM, on its hardware in a manner consistent with that partnership as it existed prior to Oracle’s hiring of Hurd.”

If the judge decides this amounts to a contractual agreement, the case will move into phase two where a jury will determine if Oracle violated the contract and the amount they were damaged. Oracle has also made a counter claim that will bar HP from making false claims about Oracle’s business practices and commitments. The counter claim also includes unspecified damages.

If HP loses this war, it will have a significant impact on HP revenue. If Oracle’s data base won’t run on HP server, many large enterprise clients will transition away from HP, which means a loss of revenue from hardware sales and the associated services. HP reported a 23 percent decline in Itanium server sales in its second quarter, which wrapped up on April 30. Although HP is fighting for the win, it’s preparing for a defeat with its Odyssey system that would run Xeon and Itanium blades.

It’s unclear how this case will end. However, both Oracle and HP are receiving negative attention from the battle. It’s unlikely that either Oracle or HP will score a complete victory, but millions will be be spent and zero technology innovation will be achieved.