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66030_OraclexsxCrossxComplaint

66030_OraclexsxCrossxComplaint

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LATHAM & WATKINS LLP Daniel M. Wall, SBN 102580 Alfred C. Pfeiffer, Jr., SBN 120965 Sadik Huseny, SBN 224659 505 Montgomery Street, Suite 2000 San Francisco, California 94111 Telephone: 415.391.0600 Facsimile: 415.395.8095 ORACLE CORPORATION Dorian Daley, SBN 129049 Deborah K. Miller, SBN 95527 500 Oracle Parkway M/S 5op7 Redwood City, CA 94070 Telephone: (650) 506-5200 Facsimile: (650) 506-7114 Attorneys for Defendant and Cross-Complainant Oracle Corporation

SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SANTA CLARA HEWLETT-PACKARD COMPANY, CASE NO. 1-11-CV-203163 Action Filed: Trial Date: June 15, 2011 February 27, 2012

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Plaintiff,

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v.

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ORACLE CORPORATION,

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Defendant.

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ORACLE CORPORATION, Cross-Complainant, v. HEWLETT-PACKARD COMPANY, Cross-Defendant.

DEFENDANT ORACLE CORPORATION’S CROSS-COMPLAINT AGAINST HEWLETT-PACKARD COMPANY FOR (1) FRAUD; (2) DEFAMATION-LIBEL; (3) INTENTIONAL INTERFERENCE WITH CONTRACTUAL RELATIONS; AND (4) INTENTIONAL INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE Assigned for all Purposes to The Honorable James P. Kleinberg DEMAND FOR JURY TRIAL

ORACLE CORPORATION’S CROSS-COMPLAINT AGAINST HEWLETT-PACKARD COMPANY CASE NO. 1-11-CV-203163

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Cross-Complainant Oracle Corporation (“Oracle”) alleges against CrossDefendant Hewlett-Packard Company (“HP”) as follows: PARTIES 1. Cross-Complainant Oracle is, and at all times material to this action was, a

Delaware corporation with its principal place of business and headquarters in Redwood City, California. 2. Cross-Defendant HP is, and at all times material to this action was, a

Delaware corporation, with its principal place of business and headquarters in Palo Alto, California. VENUE 3. Venue is proper in Santa Clara County pursuant to California Code of Civil

Procedure section 395.5 because HP’s principal place of business is situated in this County, the contract at issue was made and was to be performed in this County, and the conduct giving rise to HP’s liability arose in this County. FACTUAL ALLEGATIONS 4. This Cross-Complaint arises out of HP’s efforts to induce Oracle into an

apparently perpetual and cost-free software development commitment for the Intel Itanium platform, supposedly implicit in a public reaffirmation of a colloquial “partnership,” while HP concealed that it was days away from hiring a new board chairman, Ray Lane, and new CEO, Léo Apotheker, who HP knew Oracle distrusted so completely—and justifiably—that “partnership” would be impossible. It also arises from HP’s numerous acts of disparagement and libel when, in March 2011, Oracle announced that—like most other major software vendors before it—it was discontinuing all new software development on the Intel Itanium platform. Subsequent to that announcement, HP has, among other things, falsely blamed Oracle for Itanium’s demise and the disruption to customers that unavoidably will occur when customers eventually migrate to newer platforms, and falsely claimed that Oracle has refused to provide ongoing software support and bug-fixes for Oracle’s current customers. HP has actively tried to

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foment anti-Oracle sentiment in the marketplace, continuing to misrepresent Itanium’s future and disparaging Oracle. 5. The context of this Cross-Complaint is a business relationship between

Oracle and HP that was once complementary but is now largely competitive. For many years, Oracle and HP had a relationship that followed naturally from the way their individual selfinterests were aligned. Oracle was an enterprise software company, and did not sell computer hardware. HP was principally a hardware company, and insofar as its business touched Oracle’s (much of it does not), it sold computer servers that ran Oracle software. HP had very little in the way of an enterprise software business. Over time HP developed a substantial business providing various enterprise software services as well, but that was also complementary to Oracle’s offerings. With little “turf” to fight over and many mutual customers, a partnership in the colloquial sense evolved, and Oracle and HP worked together voluntarily in many ways. Formal contractual obligations were a part of their relationship where necessary, and there are numerous binding contracts between Oracle and HP. The parties signed formal contracts whenever they intended to be legally bound, spelling out the exact obligations to be incurred, monetary compensation, specific duration, and the like. But often they worked towards commonly-held goals without a formal contract, simply because the pursuit of their respective self-interests was sufficient to put them on the same path. Neither company ever agreed to act contrary to its own individual economic interest, however. 6. The companies’ relationship changed as their previously aligned interests

began to diverge. An important moment in this evolution was Oracle’s acquisition of Sun Microsystems, which positioned Oracle as one of HP’s three principal competitors in the market for computer servers. HP understood this was a transformative event, and wasted no time transitioning to a competitive relationship with Oracle. In July 2009, when Sun’s shareholders voted to approve the Oracle merger, HP launched a program called “SunSet” that targeted Sun’s server customers and attempted to induce them to switch to HP servers, alleging, among other things, that Oracle was not a stable and proven hardware vendor. HP’s accompanying press release said that it was cheaper to run Oracle’s database software on HP systems rather than Sun 2
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SPARC systems, which HP knew was solely the result of a pricing advantage that HP also knew would disappear as soon as Oracle owned Sun. HP also began aggressively recruiting and hiring Sun employees, capitalizing on Sun’s challenging financial situation and the disruption caused by the extended regulatory review of the transaction. Since the Sun acquisition closed, Oracle and HP have competed against each other in the sale of computer server systems on innumerable occasions, and in that setting have appropriately not acted as partners in any sense of the term. 7. The idea of an Oracle-HP “partnership” was damaged further as a result of

events in the summer of 2010. On August 6, 2010, HP’s Board voted to oust its then-CEO, Mark Hurd. Mr. Hurd had been a very effective CEO at HP. HP’s stock price doubled during his fiveyear tenure and under his leadership, HP became the world’s leading technology company by revenue. To put that in context, as of August 25, 2011 HP’s stock has declined approximately 45 percent in just over a year since Mr. Hurd was ousted, and its shareholders have lost over $55 billion in market capitalization. Mr. Hurd was also highly respected by Oracle’s management, in no small measure because he believed in and nurtured the vision of Oracle and HP as allies, particularly in the years prior to Oracle’s acquisition of Sun. In August 2010, the HP Board forced Mr. Hurd out in the wake of baseless sexual harassment charges—charges that HP itself found to be baseless and that were withdrawn by Mr. Hurd’s accuser. Oracle was sharply critical of Mr. Hurd’s ouster, pointing out that it was not only harmful to HP and its shareholders, but to business partners like Oracle as well. 8. Oracle seized the opportunity to bring Mr. Hurd onto its management team.

On September 6, 2010, Oracle announced Mr. Hurd as its new Co-President. HP reacted to this news swiftly and aggressively: it sued Mr. Hurd, alleging that he would “inevitably” violate his confidentiality obligations to HP and reveal HP’s secret information to Oracle. But a lawsuit premised on “inevitable disclosure” is not permitted under California law, which rejects the notion that a person with knowledge of a former employer’s trade secrets will unavoidably disclose those secrets if the person later works for a competitor. HP’s suit against Mr. Hurd had no objective basis in law or fact, and was obviously filed to harass Mr. Hurd, cause him to forfeit compensation he received at the time he left HP, and delay his transition to Oracle. 3
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9.

This meritless litigation further damaged HP’s relationship with Oracle. As

Oracle’s CEO Larry Ellison stated at the time: “Oracle has long viewed HP as an important partner . . . . By filing this vindictive lawsuit . . . the HP board is acting with utter disregard for that partnership, our joint customers, and their own shareholders and employees. The HP Board is making it virtually impossible for Oracle and HP to continue to cooperate and work together in the IT marketplace.”1 10. HP signaled its desire to settle the Hurd action two days after it was filed.

At the time, this appeared to be no more than an acknowledgement that HP had no chance of winning the case. In retrospect, the conclusion seems inescapable that HP had an additional hidden and more strategic agenda: HP had been considering and was on the verge of hiring and elevating into its most senior leadership positions two people—Léo Apotheker and Ray Lane— who HP knew would ensure the complete destruction of what was left of the Oracle-HP relationship. Knowing that Messrs. Apotheker and Lane were toxic to any “partnership” with Oracle, HP tried to use the settlement of the Hurd litigation as a last-chance vehicle to, among other things, induce Oracle to make hard contractual commitments both to continue developing software for the Itanium platform and to lock in favorable pricing on Oracle’s software for the Itanium platform. 11. Léo Apotheker had previously been the CEO of Oracle’s biggest

applications software competitor, SAP AG. Mr. Apotheker knew next to nothing about HP’s core businesses, so the only logical explanation for his hiring, now affirmed by HP’s recent business announcements, was that HP wanted to change direction and become more of an enterprise software company like IBM or Oracle. HP knew that Mr. Apotheker’s software background would signal to Oracle that the old relationship based on complementary interests was over. But even more importantly, HP knew that Oracle held Mr. Apotheker personally responsible for the widespread theft of Oracle’s intellectual property by an SAP subsidiary—an

Oracle Responds to HP Lawsuit, Oracle Press Release, Sept. 7, 2010, available at http://www.oracle.com/us/corporate/press/170699.

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admitted and long-lasting theft that resulted in a $1.3 billion jury verdict against SAP in November 2010. Through its subsidiary, SAP’s strategy was to tell customers they were being overcharged by Oracle for customer support and then offer a purportedly identical service at half the price. That too-good-to-be-true deal was possible only because SAP’s subsidiary was using stolen Oracle software to provide the service. In the course of that litigation SAP acknowledged its guilt, and the evidence established not only Mr. Apotheker’s involvement in SAP’s illegal business practices but also his deep animus toward Oracle. For example, one email produced in the litigation had Mr. Apotheker writing: “I’m really pissed…we need to inflict some pain on oracle.” In addition, Mr. Apotheker personally led an effort to shakedown Oracle by suggesting he could get the European Commission to end its extended antitrust review of the Oracle-Sun deal—which was extended largely because SAP led an effort to get the deal blocked—in exchange for settling the litigation about SAP’s theft of Oracle’s intellectual property. Given Mr. Apotheker’s history, HP knew that Oracle would never accept Mr. Apotheker as any kind of “partner,” and that his mere presence as HP’s CEO would poison the companies’ relationship. In fact, Mr. Apotheker’s first activity after becoming HP’s CEO was evading an Oracle trial subpoena in the intellectual property litigation by staying more than 100 miles from the trial courthouse—which meant staying out of HP’s Palo Alto headquarters. 12. As for Ray Lane, he was best known as Oracle’s former President and Chief

Operating Officer. Like Mr. Apotheker, his experience was in enterprise software, and his appointment would confirm the view that HP wanted to change direction and become more of an enterprise software company like Oracle. Furthermore, Mr. Lane too had a well-documented animosity towards Oracle CEO Larry Ellison, traced to his firing from Oracle in 2000. After leaving Oracle, Mr. Lane publicly blamed Mr. Ellison for his ouster and became a frequent Oracle critic. 13. The Hurd settlement negotiations took place between September 9 and 20,

2010, just before HP announced the hiring of Messrs. Apotheker and Lane. HP correctly understood that if Oracle knew about HP’s imminent plans to hire Messrs. Apotheker and Lane, Oracle would not make any business concessions whatsoever simply to resolve an objectively 5
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baseless employment lawsuit against Mr. Hurd. Furthermore, the very last thing Oracle would have agreed to do was to reaffirm any kind of Oracle-HP “partnership.” HP thus intentionally and actively concealed this information from Oracle while negotiating the Hurd Agreement. Although HP has never revealed precisely when it began recruiting Messrs. Apotheker and Lane, the timing of their hirings is such that HP personnel and/or Board members involved with the Hurd litigation and settlement—including HP’s general counsel and corporate secretary, Michael J. Holston, who was directly involved in the settlement negotiation—must have known of the plans to hire them while the Hurd settlement talks occurred. Indeed, HP announced the hiring of Messrs. Apotheker and Lane just ten days after it signed the Hurd Agreement. It is inconceivable that Mr. Holston and others did not know that HP was simultaneously in the process of hiring, to its most senior positions, two long-time Oracle foes. 14. From the beginning of the settlement negotiations, HP proposed a set of

terms that included stringent restrictions on Mark Hurd’s ability to conduct various duties as an executive at Oracle, including those related to personnel and hiring matters, Oracle’s actual and prospective customers, and analysis of Oracle’s strategic business prospects. HP also proposed terms that unquestionably went well beyond the scope of an employment lawsuit or any relief HP could have hoped to obtain in the Hurd litigation. These terms included not only the language “reaffirming” the parties’ “partnership” but also business restrictions that had nothing to do with Mr. Hurd at all. Oracle agreed to these terms, in particular the “reaffirmation,” simply because Oracle believed they would mollify HP’s paranoia without imposing any real obligations on Oracle. Oracle would not have agreed to the Hurd Agreement, and especially not the terms that so clearly went beyond the scope of an employment lawsuit, had it known what was in the works. 15. Paragraph 1 of the final Hurd Agreement—which contains the

“reaffirmation” language—arose out of a conversation that Oracle Co-President Safra Catz had with HP Executive Vice President Ann Livermore on September 11, 2010, two days after HP first made a settlement demand. Ms. Livermore asked Ms. Catz to publicly reaffirm the historical Oracle-HP “partnership,” which Ms. Catz understood to mean that Oracle and HP 6
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would make a few public statements to the effect that the companies were moving on from the rancor of the Hurd controversy and would continue to support mutual customers—in other words, it would be business as usual. There was neither a proposal from Ms. Livermore nor any agreement by Ms. Catz for any new, binding contractual commitments beyond “burying the hatchet” publicly, least of all any suggestion that Oracle would give up its historical discretion to establish its own software pricing, development plans or priorities. 16. On September 12, 2010, HP counsel sent to Oracle a term sheet that

purported to capture what Ms. Catz and Ms. Livermore discussed. HP proposed the following: Reaffirmation of the Oracle/HP Partnership. The parties will re-affirm their commitment to their longstanding strategic partnership and their mutual desire to continue to support their joint customers. This re-affirmation to include a commitment from Oracle to continue to offer its product suite on HP Platforms on terms that are as good as or better than any other platform, and to co-market and co-sell with HP such that the products available on HP Platforms are promoted or sold on par with or better than any other platform Oracle supports (other than Exadata). The detailed operative terms (including duration of the contractual commitment) to be resolved in the drafting of the actual written agreement. 17. Oracle’s General Counsel, Dorian Daley, responded by email the same day,

rejecting this proposal and making it crystal clear that Oracle had no intention of entering into any new binding contractual commitments, and that “reaffirming” the relationship meant exactly that—they would “continue to work together as the companies have” according to their respective views as to what was best for customers. Ms. Daley stated (emphasis added): Reaffirmation of the Oracle – HP partnership: This was intended to reaffirm and continue the existing relationship and not to put HP in a better position tha[n] it currently enjoys or result in the negotiation of a new contractual commitment. Ms. Catz and Ms. Livermore did not discuss anything more tha[n] an agreement to continue to work together as the companies have – with Oracle porting products to HP’s platform and HP supporting the ported products and the parties engaging in joint marketing opportunities – for the mutual benefit of customers. They did not discuss, and Oracle will not agree, to a “most favored 7
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nations” clause. Given their market positions, such an agreement might even be considered suspect by regulatory authorities. Negotiation of “detailed operative terms” is therefore not necessary. In the same email, Ms. Daley attached a draft settlement agreement which contained the following articulation of Paragraph 1: Reaffirmation of the Oracle-HP Partnership. Oracle and HP 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 HP platforms and HP will continue to support Oracle products (including Oracle Enterprise Linux and Oracle VM) on its hardware in a manner consistent with that partnership. In the context of Ms. Daley’s cover email, that language obviously was not meant “to put HP in a better position tha[n] it currently enjoy[ed].” Neither could it reasonably be construed as “a new contractual commitment.” 18. HP knew that pursuant to Ms. Daley’s proposed language and email

explanation, Oracle was not locked-in to any particular software development commitment. Among other things, Oracle had—during the “partnership”—always retained complete discretion to support whichever HP technologies it chose, and could change its practices—just as HP could—in response to changed conditions. Furthermore, HP knew that formal software porting contracts, where they existed as part of the “partnership,” were carefully constrained and supported by substantial financial consideration—there was even an existing, detailed and carefully limited Itanium porting agreement. In short, HP knew that it obtained no specific business commitments or guarantees simply from Oracle “continu[ing] to offer its product suite on HP platforms . . . in a manner consistent with” the historical notion of partnership. 19. As a result, in its very next draft of the settlement agreement, dated

September 13, 2010, HP again proposed specific language setting forth explicit obligations, among them that Oracle would, for the next five years, (i) continue software development for HP’s Itanium platform (HP-UX), and (ii) maintain its software pricing. HP’s new language for 8

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Paragraph 1 stated (with HP’s proposed inserts in bold): Reaffirmation of the Oracle-HP Partnership. Oracle and HP 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 HP platforms and HP will continue to support Oracle products (including Oracle Enterprise Linux and Oracle VM) on its hardware in a manner consistent with that partnership. Oracle will continue to support all ongoing versions of HP-UX with Oracle’s relevant database, middleware and application products with the availability, marketing and pricing in competitive terms that Oracle has provided HP for the past five years. Oracle will continue to provide access to the Java technology and tools such that HP can continue to support its operating systems (e.g., HP-UX, OpenVMS, Nonstop) in a manner similar to the way it does today. Oracle agrees to continue to provide Solaris for HP’s x86 platforms in a manner similar to what it provides HP today. Oracle agrees to continue to purchase HP server hardware for internal use at a rate similar to what Oracle purchases today.

20.

Oracle also rejected this language unequivocally because, as both Ms. Catz

and Ms. Daley had said, Oracle was unwilling to give HP greater commitments than HP ever had in the past. Twice rejected, HP did not again seek to insert binding and specific contractual commitments into Paragraph 1. The final, executed version of Paragraph 1 is nearly identical to the version Oracle first drafted, adding only that the parties would reaffirm the idea of partnership “… as it existed prior to Oracle’s hiring of Hurd.” From Oracle’s perspective, that language confirmed that the only commitment Oracle was making was that Mr. Hurd’s hiring itself would not bring about a change in Oracle’s business practices. 21. HP now contends that Paragraph 1 of the Hurd Agreement obligates Oracle

to port to the Itanium platform each new version of Oracle’s software products because, “[since] the time HP introduced its first Itanium servers in 2001, Oracle has always ported its database

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and other software to run on the Itanium platform.”2 HP suggests it is irrelevant that the Itanium platform is dying and has no future; that, consistent with the partnership, Oracle eventually discontinued software development for other obsolete platforms; that HP’s other “partners” have discontinued software development for Itanium as well; and that the parties had an express, carefully limited Itanium porting agreement. Paragraph 1, according to HP, trumps all and creates a perpetual software development commitment by Oracle at no cost to HP. 22. Oracle emphatically denies that HP has any rights to continued software

development or guaranteed pricing under Paragraph 1 of the final Hurd Agreement. However, if any such rights are found to exist in the language of Paragraph 1, they would not exist but for HP’s deliberate and active concealment of the material fact that it was seeking these commitments while planning to hire Messrs. Apotheker and Lane as HP’s new management team. Oracle would not have signed on to any settlement of the Hurd litigation had it known this information, and certainly the last thing it would have ever agreed to do was “reaffirm” a partnership that on the HP side would be led by Messrs. Apotheker and Lane. To the extent HP obtained the rights it claims in this suit, it did so by fraud. 23. Unaware of HP’s plans to hire Messers. Apotheker and Lane, Oracle agreed

to the terms of the Hurd Agreement, and the parties executed the document on September 20, 2010. Oracle and HP issued their joint press release that same day in which they reaffirmed their so-called “partnership.” 24. On September 30, 2010, just ten days later, HP announced that it had

appointed Mr. Apotheker as its new CEO and Mr. Lane as the non-executive chairman of its Board. The media aptly construed HP’s actions as a direct assault on Oracle. The Wall Street Journal reported on Mr. Apotheker’s hiring by saying that he offered “a characteristic that seems to be highly valued at H-P these days—a dislike of Oracle.”3 An All Things Digital reporter
2

Joint Case Management Conference Statement, Aug. 5, 2011, p. 5 (HP position statement). Valentino-DeVries, Jennifer, Is Leo Apotheker a Good Fit as H-P’s New CEO?, WALL ST. J., Sept. 30, 2010, available at http://blogs.wsj.com/digits/2010/09/30/is-leo-apotheker-a-goodfit-as-h-ps-newceo/.

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referred to Mr. Lane’s hiring as “a jab at Oracle.”4 To the extent there was any binding “partnership” commitment between Oracle and HP, HP’s hiring of Messrs. Apotheker and Lane surely breached it. 25. The Oracle-HP relationship has not been the same since HP hired

Messrs. Apotheker and Lane. The particular flashpoint that led to this litigation concerned Oracle’s decision to discontinue future software development specific to Intel’s Itanium platform. Over the course of the past several years, multiple hardware and software vendors have announced a move away from the Itanium platform. When, on March 22, 2011, Oracle followed suit, it was one of the last of the major software companies to announce that it would end new software development for the Itanium platform. Oracle made the decision because it no longer makes sense to devote software development resources to a dying platform that has been eclipsed by Intel’s newer Xeon chips employing the x86 architecture. The numbers tell the story: Intel’s Xeon shipments now exceed Itanium shipments by more than one hundred to one. HP is one of the last hardware or software companies in the world that remains seriously committed to Itanium, and it does so solely because Itanium support agreements likely account for a large percentage of its profits. Likely even Intel would end-of-life the Itanium platform of its own accord and focus on its x86 architecture; almost certainly, Intel continues to develop Itanium chips only at HP’s behest. 26. Oracle decided to discontinue further software development on Itanium in

large part on information it received directly from Intel regarding Intel’s focus on developing Xeon, rather than Itanium. The truth had become apparent, and with this information it was time for Oracle to focus its development resources, for the good of its consumers, on newer technologies. At the same time, Oracle announced that it would continue to support its current customers with Itanium systems for years to come, so that their migration to other systems would be as painless as possible.

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Paczkowski, John, HP Names Ex-SAP Chief Apotheker as CEO, ALL THINGS D, Sept. 30, 2010, available at http://allthingsd.com/20100930/hp-names-new-ceo-leo-apotheker/.

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27.

HP was furious that Oracle had joined the other major software

manufacturers in abandoning future development on Itanium. It began a widespread campaign to vilify Oracle, planting anti-Oracle stories in the press and releasing defamatory statements to the public and to Oracle’s customers. The point of this campaign is to convince customers that Itanium would have a long-term future but for Oracle’s actions, and therefore that Oracle is to blame for any harm to customers traceable to Itanium’s demise. HP conceals and actively misrepresents its own knowledge about Itanium’s precarious status, instead stating repeatedly that there is a longer than “ten year” Itanium roadmap (long enough to convince customers to delay migrations). It then accuses Oracle of lying to customers by not accepting this myth as fact, but to the contrary telling customers—as is true—that Itanium is dying. 28. HP’s false and misleading statements regarding Oracle, without limitation,

include the following: a. On March 23, 2011, the HP Newsroom released a statement in which Dave Donatelli, HP’s Executive Vice President and General Manager of Enterprise Servers, Storage and Networking, accused Oracle of engaging in “a pattern of anti-customer behavior as they move to shore up their failing Sun server business.”5 Mr. Donatelli falsely accused Oracle of putting enterprises and governments “at risk while costing them hundreds of million of dollars in lost productivity in a shameless gambit to limit fair competition.”6 b. Also on March 23, 2011, HP employee Cynthia Dreher falsely alleged that Oracle was employing “bully[ing] tactics and forced migrations[,]” and disseminating “disinformation” regarding the

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See Bauley, Ethan, HP comment on Oracle support for Itanium Processors, Data Central, the official HP corporate blog, Mar. 23, 2011, available at http://h30507.www3.hp.com/t5/Data-Central/HPcomment-on-Oracle-support-for-Itanium-Processors/ba-p/89675. Id.

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future of Itanium.7 c. On March 30, 2011, HP employee Kristie Popp falsely stated that “during the past 12 months, Oracle has shown a pattern to limit customer choice, raise prices, and cut off partners. Clearly, Oracle’s actions have been in the best interest of Oracle and not that of customers.”8 d. On April 16, 2011, HP employee Jacob Van-Ewyk falsely stated that “Oracle[’s] decision to stop development for Intel Itanium-based servers” had left “many joint customers without a solution . . . .”9 29. HP’s representations are not statements of opinion or within any competitive

privilege. Among other things, they falsely assert as objective truths that Oracle is the cause of Itanium’s demise, that there is a long ten-year roadmap for multiple generations of Itanium chips that Intel fully supports, that Oracle is arbitrarily causing harm to Itanium users, that Oracle has lied about Itanium’s future prospects, and that Oracle has a history and pattern of anti-customer behavior. 30. One of HP’s most brazen lies to the marketplace is that Oracle has refused to

provide ongoing software support and bug-fixes for current versions of Oracle’s software for Itanium servers. That is utterly false. It is also a claim that has Léo Apotheker’s fingerprints on it. The Oracle-SAP litigation showed that, while at SAP, Mr. Apotheker made or authorized similarly disparaging statements to the effect that Oracle had abusive customer support policies.

Dreher, Cynthia, Customers Rest Assured: HP & Intel are Committed to Long Future for Itanium, HP’s Mission Critical Computing Blog, Mar. 23, 2011, available at http://h30507.www3.hp.com/t5/Mission-Critical-Computing-Blog/Customers-Rest-Assured-HP-ampIntel-are-Committed-to-Long-Future/ba-p/89673. Popp, Kristie, FAQs from HP on the Oracle Itanium Announcement, HP’s Mission Critical Computing Blog, Mar. 30, 2011, available at http://h30507.www3.hp.com/t5/Mission-CriticalComputing-Blog/FAQs-from-HP-on-the-Oracle-Itanium-Announcement/ba-p/89977. Van-Ewyk, Jacob, The Trend to Cloud, HP’s Mission Critical Computing Blog, Apr. 16, 2011, available at http://h30507.www3.hp.com/t5/Mission-Critical-Computing-Blog/The-Trend-toCloud/ba-p/90935.

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In fact, Oracle is fully supporting the current (and many past) versions of its Itanium-based software, by issuing bug fixes per its standard policies. 31. HP continued its smear campaign by filing this lawsuit against Oracle on

June 15, 2011—three months after Oracle’s Itanium announcement. The lawsuit alleges, among other things, that the Hurd Agreement contractually obligates Oracle to maintain its license pricing and to continue developing new software for HP’s Itanium platform indefinitely, and that Oracle breached the Hurd Agreement by ceasing to do so. 32. HP’s smear campaign is systematic. It does not consist of an isolated

statement or two, but a well-orchestrated effort to shift the blame to Oracle for Itanium’s demise. HP has a website dedicated to selling these lies, http://h18004.www1.hp.com/products/solutions/ customers_first.html. HP has also reached out directly to Oracle’s customers, urging them “to speak out now and tell Oracle how you feel” and “[t]ell them to change course”10 or risk losing those customers’ business. HP did not stop there. It also created and posted to its website several videos featuring joint HP-Oracle customers, which quoted the customers criticizing Oracle’s Itanium decision using language suspiciously similar to HP’s language in its own press releases and public statements. 33. Unsurprisingly, HP’s incessant Oracle-bashing has caused substantial

customer confusion and anger, and injury to Oracle’s reputation and existing and prospective customer relations. Oracle has already expended and continues to expend substantial resources setting the story straight and assuaging its customers’ unfounded fears. 34. HP’s pattern of unlawful, defamatory and anticompetitive conduct as

described in part above, including fraudulently inducing Oracle to enter into the Hurd Agreement and making false and misleading statements to Oracle’s customers and the media, has caused and continues to cause Oracle irreparable harm. HP’s defamatory statements, in particular, have had

10

Dreher, Cynthia, Itanium and IT Vendor Commitment – One Issue, Many Voices, HP’s Mission Critical Computing Blog, Apr. 19, 2011, available at http://h30507.www3.hp.com/t5/MissionCritical-Computing-Blog/Itanium-and-IT-Vendor-Commitment-One-Issue-Many-Voices/ba-p/91027.

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ORACLE CORPORATION’S CROSS-COMPLAINT AGAINST HEWLETT-PACKARD COMPANY CASE NO. 1-11-CV-203163

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a direct, substantial and negative impact on Oracle by injuring Oracle’s reputation and interfering with Oracle’s existing and prospective customer relationships. Specifically, HP’s actions have resulted in existing and prospective customers seeking compensation and guarantees from Oracle, threatening to withdraw their business from Oracle, and/or vowing not to do business with Oracle in the future. HP’s conduct has also created serious uncertainty in the marketplace, thereby injuring customers and competition. FIRST CAUSE OF ACTION (Fraud) 35. Oracle incorporates by reference the allegations in Paragraphs 1 through 34

above as though fully set forth herein. 36. HP fraudulently induced Oracle to enter into the Hurd Agreement by

actively concealing material information that was unknowable for Oracle, namely, the fact that HP was in process of hiring Messrs. Apotheker and Lane as its new executive leadership, the intended consequence of which was to move HP into a new strategic direction less complementary to and more competitive with Oracle’s business. 37. Given the well-documented animosity between Oracle and Messrs.

Apotheker and Lane, HP knew that Oracle would not have signed the Hurd Agreement had it known of HP’s imminent plans, especially any “partnership” commitments or other business restrictions (e.g., Paragraph 7) unrelated to Mr. Hurd’s move to Oracle. HP had a duty to disclose this exclusive material information. In fact, HP knowingly and actively withheld this information from Oracle with the intent to fraudulently induce Oracle to enter into the Hurd Agreement. 38. Oracle did not know or suspect that HP was secretly in the process of hiring

senior executives whose interests were in sharp conflict with Oracle’s. Ignorant of these material facts, Oracle was induced to enter into the Hurd Agreement. Had Oracle known that HP was to hire Messrs. Apotheker and Lane ten days after the Agreement was executed, Oracle would not have signed the Agreement nor bound itself to any of the obligations contained therein,

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ORACLE CORPORATION’S CROSS-COMPLAINT AGAINST HEWLETT-PACKARD COMPANY CASE NO. 1-11-CV-203163

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regardless of scope or specificity, including the business restrictions on it or its executive Mark Hurd. 39. 40. 41. Oracle’s reliance was reasonable and justifiable. Oracle has suffered injury as a direct and proximate result of HP’s fraud. Oracle seeks rescission of the Hurd Agreement. Oracle also seeks damages

for the economic injury and lost business opportunities it has suffered as a direct and proximate result of HP’s fraud, in an amount to be proven at trial. 42. HP’s conduct was malicious, oppressive and fraudulent, and Oracle is

therefore entitled to an award of punitive and exemplary damages. SECOND CAUSE OF ACTION (Defamation – Libel) 43. Oracle incorporates by reference the allegations in Paragraphs 1 through 34

above as though fully set forth herein. 44. HP has defamed Oracle by publishing numerous false and misleading

statements alleging Oracle has engaged in anti-competitive and anti-customer behavior, including without limitation the statements referenced in Paragraphs 27-28 above. 45. By and through these statements, HP has imputed to Oracle fraud,

dishonesty and questionable business practices in connection with Oracle’s sale and support of its software and hardware products. 46. HP’s statements were made without privilege and were published with

knowledge of their falsity or reckless disregard for their truth or falsity, i.e., with actual malice. 47. HP’s statements were published with the intent of harming Oracle, its

reputation and its relationships with current and prospective customers. And in fact, Oracle has suffered injury as a direct and proximate result of HP’s conduct. Oracle has expended and continues to expend substantial resources alleviating the baseless concerns fomented by HP, and defending itself in the media. 48. HP’s actions have damaged Oracle, in an amount to be proven at trial.

Oracle also seeks and is entitled to punitive damages because HP’s statements were made with 16
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knowledge of their falsity, or with reckless disregard of their truth or falsity and with the intention of causing injury to Oracle. 49. Additionally, Oracle demands a public apology from HP, and a public

acknowledgement that its defamatory statements against Oracle are false and were made with knowledge of their falsity. THIRD CAUSE OF ACTION (Intentional Interference with Contractual Relations) 50. Oracle incorporates by reference the allegations in Paragraphs 1 through 34

above as though fully set forth herein. 51. Oracle has existing valid contractual relationships with customers that

currently use Oracle products under which the customers have agreed to purchase and/or compensate Oracle for services provided. 52. 53. HP has knowledge of these valid contractual relationships. HP’s intentional actions and conduct, including without limitation those set

forth in Paragraphs 27-34 above, were and are designed to induce a breach and/or disruption of Oracle’s contractual relationships with its existing customers. 54. HP has in fact disrupted Oracle’s existing contractual relationships, resulting

in customers seeking compensation and guarantees from Oracle, threatening to withdraw their business from Oracle, and/or vowing not to do business with Oracle in the future. 55. HP knew that its conduct was certain or substantially likely to directly and

proximately cause the breach and/or disruption of Oracle’s contractual relationships with its existing customers. 56. HP’s intentional conduct has no lawful or legitimate competitive purpose.

To the contrary, HP’s defamatory, deceptive, misleading, unfair, and unlawful conduct was designed specifically to cause harm to Oracle and has violated California law. 57. Oracle has suffered injury to its business, including damage to its reputation

and customer relationships and lost sales, as a direct and proximate result of HP’s interference with its existing contractual relationships. 17
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FOURTH CAUSE OF ACTION (Intentional Interference with Prospective Economic Advantage) 58. Oracle incorporates by reference the allegations in Paragraphs 1 through 34

above as though fully set forth herein. 59. Oracle has existing and prospective relationships with customers that

currently use or are considering using Oracle products. Many of these customers have existing and ongoing contracts with Oracle under which they have agreed to purchase and/or compensate Oracle for services provided. Oracle also has relationships and is in negotiations with prospective customers who are considering the use of Oracle products or services in the future. These relationships very likely would have resulted in future economic benefit to Oracle. HP has knowledge of these relationships. 60. HP has intentionally sought to interrupt Oracle’s relationships with its

existing and prospective customers through the conduct described above, including without limitation intentionally performing the acts and engaging in the conduct set forth in Paragraphs 27-34 above, designed to disrupt Oracle’s customer relationships. 61. HP has in fact disrupted Oracle’s existing and prospective customer

relationships, resulting in customers seeking compensation and guarantees from Oracle, threatening to withdraw their business from Oracle, and/or vowing not to do business with Oracle in the future. 62. HP’s intentional conduct—designed to interfere with Oracle’s existing and

prospective customer relationships—has no lawful or legitimate competitive purpose. To the contrary, HP’s defamatory, deceptive, misleading, unfair and unlawful conduct was designed specifically to cause harm to Oracle and has violated California law. 63. Oracle has suffered injury to its business, including damage to its reputation

and customer relationships and lost sales, as a direct and proximate result of HP’s interference with its prospective economic relationships. /// /// 18
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PRAYER FOR RELIEF WHEREFORE, Oracle prays for judgment against HP as follows: 1. 2. 3. 4. Rescission of the Hurd Agreement; General and special damages in an amount to be proven at trial; Punitive damages as permitted by law; Permanent injunctive relief, including an order prohibiting HP from making

false and misleading statements regarding Oracle’s business practices and commitment to its customers and remedying the harm caused by HP’s conduct; 5. 6. 7. Reasonable attorneys’ fees as permitted by law; Costs of suit herein incurred; and All such other and further relief as the Court may deem proper. DEMAND FOR JURY TRIAL Cross-Complainant Oracle hereby demands a trial by jury in the above-captioned matter on all matters so triable. Dated: August 29, 2011 LATHAM & WATKINS LLP Daniel M. Wall

By

/s/ Daniel M. Wall Daniel M. Wall Attorneys for Defendant and CrossComplainant Oracle Corporation

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ORACLE CORPORATION’S CROSS-COMPLAINT AGAINST HEWLETT-PACKARD COMPANY CASE NO. 1-11-CV-203163

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