LATHAM & WATKINS LLP Daniel M. Wall, SBN 102580 · Oracle also brings this cross-complaint because...

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ORACLE CORPORATION’S AMENDED CROSS-COMPLAINT AGAINST HEWLETT-PACKARD COMPANY

CASE NO. 1-11-CV-203163

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, Plaintiff, v. ORACLE CORPORATION, Defendant.

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

CASE NO. 1-11-CV-203163 Action Filed: June 15, 2011 Trial Date: April 2, 2012 ORACLE CORPORATION’S AMENDED CROSS-COMPLAINT AGAINST HEWLETT-PACKARD COMPANY FOR (1) VIOLATION OF THE LANHAM ACT, 15 U.S.C. § 1501 ET SEQ.; (2) VIOLATION OF CAL. BUS. & PROF. CODE § 17500 ET SEQ.; (3) VIOLATION OF CAL. BUS. & PROF. CODE § 17200 ET SEQ.; (4) DEFAMATION – LIBEL; (5) INTENTIONAL INTERFERENCE WITH CONTRACTUAL RELATIONS; (6) INTENTIONAL INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE; AND (7) FRAUD / EQUITABLE RESCISSION Assigned for all Purposes to The Honorable James P. Kleinberg DEMAND FOR JURY TRIAL

PUBLIC REDACTED VERSION

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

Cross-Complainant Oracle Corporation (“Oracle”) alleges against Cross-

Defendant 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.

NATURE OF THE ACTION

4. Oracle brings this amended cross-complaint seeking injunctive relief and

damages for unlawful injuries caused by HP. As set forth below, HP engaged in a multi-year

campaign of secrecy and deception designed to conceal the truth about Intel Corporation’s

commitment to the Itanium microprocessor in order to extend its Itanium server business at

Oracle’s expense and reap large profits from its own unsuspecting installed base of Itanium

users. HP made false and misleading statements to Oracle, the public, analysts, the press,

customers, potential customers and investors, all with the intent to mislead these audiences about

the vitality and future prospects of Itanium and material amounts of HP’s associated revenue

stream. When Oracle announced the truth about Itanium—that Intel’s strategic focus was not on

Itanium but on its competing Xeon line of microprocessors, and that Itanium was nearing its end

of life—HP reacted with a ferocious effort to foment false customer outrage and to vilify and

defame Oracle, all to buy itself more time to milk its customer base and falsely blame Oracle for

Itanium’s demise. HP’s false and misleading public statements violate section 43 (a) of the

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Lanham Act, 15 U.S.C. § 1125(a), and California statutory and common law, in that they

constitute false advertising, false statements of association, unfair competition and defamation.

5. Oracle also brings this cross-complaint because HP fraudulently induced

Oracle to enter into an agreement—the Hurd Agreement1—in the context of a lawsuit HP filed

against its former CEO, by concealing and misrepresenting the truth about Itanium, and by

concealing material information about HP’s imminent intent to hire Oracle antagonists to high-

level HP executive positions. HP’s actions constitute extrinsic fraud. Oracle hereby seeks

rescission of the Hurd Agreement.

FACTUAL ALLEGATIONS CONCERNING HP’S MISREPRESENTATIONS AND DECEPTIONS CONCERNING INTEL’S COMMITMENT TO ITANIUM

A. HP’s Campaign of Deceit Regarding the Status and Prospects of Itanium

6. This cross-complaint arises out of a long-term effort by HP to prop up its

Itanium-based computer server business—servers ironically sold under the name “Integrity.” HP

has deliberately misrepresented the current status and limited future “roadmap” for Intel’s

Itanium microprocessors, the chips that power Integrity servers.

7. Integrity is one of HP’s products marketed for customers running “mission

critical” applications. A broad range of computer servers handle “mission critical” loads, but HP

has promoted the notion that Integrity and some of its higher-end Xeon servers are “business

critical servers,” which is also the name HP has given to its business unit (“BCS”) responsible

for Itanium. Any customer looking to support the software applications handling the enterprise’s

heaviest and/or most important workloads will be very sensitive to the future prospects for the

technologies embedded in the servers it chooses. In general, such customers will not buy a

server whose underlying technologies are nearing their “end of life,” meaning the point of time

when the technologies are being phased out in favor of newer and better alternatives.

Technology companies often publish product roadmaps to indentify planned new innovations

and time frames for those innovations. Any indication that the technology’s sponsor is not

1 Ex. A (Hurd Agreement (Sept. 20, 2010)).

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releasing significant new innovations or is not devoted to a long, open-ended commitment can

devastate new sales of existing products and speed migration of existing customers to new

platforms. 2 Importantly, customers want their major technology providers to be independently

committed to the platform. In the case of Itanium, that means that customers want assurance that

Intel believes in the platform on its own merits and is fully and enthusiastically committed to it.

8. By early if not earlier, HP learned that Intel wanted to end Itanium

development and production. The chip had always been a disappointment (in absolute terms and

relative to the market’s aspirations for it), and by 2008 Intel was achieving with its Xeon x86-

based chips the performance required to support significant or critical demands at a far lower

cost for customers and a lower cost of production for Intel. In other words, Xeon became Intel’s

desired solution for so-called “business critical systems,” and a result, Intel wanted out of

Itanium. HP internal documents note numerous reasons for Intel’s decision:

.

But Intel’s decision to abandon Itanium threatened HP because HP’s proprietary HP-UX

operating system and Integrity servers only ran on Itanium chips. Without Itanium, HP-UX and

Integrity were obsolete. HP faced two profoundly negative consequences.

9. First, HP-UX was (and is) HP’s only proprietary operating system for its

servers, and HP uses it only for its Itanium-based servers. Today and into the future, mission

critical computing is about open standards, non-proprietary operating systems like Linux, and

many options for consumers. HP, however, wanted to keep customers on its proprietary HP-UX

operating system because it is an effective customer control device. The significant installed

base of HP-UX customers are securely locked-in to HP, with buying HP-UX

support contracts from HP which generate HP profit every year. Without

Itanium, and because HP decided not to develop HP-UX for its Xeon-based servers, HP knew its

2 Importantly, vendors routinely continue to support older versions of products well after their “end of

life” and typically for many years afterwards. “End of life” refers to the end of the sales side of the business. That is the case here as well.

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support revenues from HP-UX would collapse in a few years. Customers would most likely

migrate to Xeon systems and non-proprietary operating systems like Linux, and HP would get

far less support revenues because, among other things, (1) Itanium systems are more expensive

than x86 systems, (2) there are fewer engineers with Itanium experience than x86 systems, thus

increasing the labor costs for Itanium support, and (3) the “attach” rate for support contracts

(i.e., incidence at which customers will actually purchase support for the hardware) is much

higher on HP-UX on Itanium than on non-proprietary operating systems such as Windows and

Linux on x86. So, even if HP found some way to sell alternative servers to these customers,

there was no way for HP to replace the profitable HP-UX support revenues.

10. Second, HP had made HP-UX on Itanium its flagship, preferred offering

for its so-called mission critical computing. HP has long been socializing the marketplace that

Itanium servers running HP-UX were the best way to handle customers’ large or complex

applications and workloads. As a result of those efforts, Integrity servers were clearly perceived

as the best HP products for such customers. Internally, HP realized that on account of its own

efforts to promote Integrity, it had essentially gone “all in” on the product for these customers,

such that without Integrity it would not be viewed as competitive in this space any longer. At the

very least it would be far less competitive. Intel’s desire to stop Itanium production thus would

mean that HP was out of the “business critical server” space it had defined and claimed as its

own. Internal documents voice the fear that this space would essentially

In other words, HP had backed itself into a corner, overselling its

Itanium solutions and under-selling its Xeon solutions to that point that Intel’s decision to cease

Itanium production was life-threatening. As HP’s Senior Vice President and General Manager in

charge of its Business Critical Systems unit put it, HP was

11. HP therefore made a bold play: see if it could entice Intel to continue to

manufacture Itanium chips by paying it to continue producing

Itanium chips for a period of time—but secretly—so that HP could also pass off to the world that

nothing had changed, the Itanium processor was still alive and well, and Intel’s commitment to it

had not wavered. In HP and Intel did enter into a brand-new agreement—the

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“Itanium Collaboration Agreement” whereby Intel, would prolong

Itanium

” Under that agreement

The stunning

deal was a pure pay-off to induce Intel to keep churning out processors that it really

wanted to kill. According to its plan, HP did not reveal this material agreement to the

marketplace, or even to its own salesforce.

12. There is, of course, nothing wrong with entering into a contract with a

supplier to ensure the supply of a key input. Had HP simply entered into the Intel deal and

revealed it —perhaps taken credit for it—Oracle would have nothing to complain about. Indeed,

the public, HP’s actual and prospective customers, HP’s salesforce and others had long-known

that Intel and HP had initially entered into an agreement in the 1990s to jointly develop Itanium,

before Intel assumed control for the development and manufacture of the chip. But this new

agreement was something quite different: HP could not have the world, its customers or its

investors know that Intel desperately wanted out of Itanium, and that it would only, reluctantly,

keep making the chip if Secrecy and the appearance that Intel

was committed to Itanium on its own merits were thus integral parts of HP’s strategy.

And this “Collaboration

Agreement” was, in fact, never revealed—until Oracle uncovered it in this litigation. HP worked

hard to keep the agreement buried, even from its own people.

The question screams

out: Why?

13. The primary reason is that HP understood that a deal to extend the life of

Itanium artificially and through extraordinary life-saving measures would clearly signal to the

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marketplace that the end of Itanium was impending. That Intel had to be paid to put Itanium on

life support would surely be material information for customers making long-term, multi-million

dollar purchase decisions. As HP’s internal documents show, customers are prone to abandon a

server technology as soon as HP was concerned that

announcing an agreement whereby HP pays Intel but only gets a

would begin to affect purchasing decisions immediately, because it would

shatter the all important perception of vitality and longevity for that particular server line. As an

HP employee puts it:

14. HP therefore had a lot to gain by keeping the Intel agreement secret and

committing Intel to adopting a “business as usual” posture as it announced its Itanium roadmap.

And so HP decided to deceive customers and the market—and even its own sales force—by

letting everyone believe that Intel had extended the Itanium roadmap on its own initiative and for

its own reasons. Since the agreement was signed in , HP has on innumerable

occasions touted the long Itanium roadmap and Intel’s commitment to the chip as a reason for

consumers to keep purchasing and using Itanium systems—without once mentioning Intel’s

desire to stop producing Itanium, the life-support agreement with Intel or the date certain when

Itanium production would end.

15. HP also did not want to reveal that much of the Itanium roadmap is, in its

own words, “ .” The secret agreement HP has with

Intel does not obligate or incentivize Intel to develop great Itanium chips—with the performance

gains one would expect from one generation to the next. Its purpose, again in HP’s own words,

is simply to “

” The agreement thus

. The agreement clearly reflects an understanding between HP and

Intel that for

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None of this has been revealed to consumers or to the market,

who instead have heard HP tout Intel’s commitment to long-term roadmaps and competitive

Itanium chips.

16.

. HP therefore

entertained—and abandoned—numerous alternative plans to stave off the inevitable. One such

plan is outlined below—with 2012 representing, in HP’s words, the date of “

”

17. Instead, HP extended the “Itanium Collaboration Agreement”—

and the fraud on consumers and Oracle. It did so when it decided, contrary to its original plan,

not to continue the effort to

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When this became clear in early 2010, HP—with no real answer to its dilemma—

elected to push out its problem yet again. It decided to seek from Intel another undisclosed,

extended Itanium commitment and continue the illusion of a long, Intel-initiated Itanium

roadmap.

18. HP amended the “Itanium Collaboration Agreement” with Intel

Rather, in a

clever deception,

The obvious and intended purpose of this is to further the

illusion of a longer roadmap—and again, extend the end of life visibility date that was so

important to customers. In HP’s words, “

HP did not reveal any of this to the marketplace.

19. The new agreement also clearly allows Intel to

A key part of this is that

The typical reason this is

done—and the reason here—is that it is cheaper, here for Intel, to

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HP, however, has not told the market that any Itanium chip after

will be , because it understands that consumers would

react accordingly. In fact, if it became clear that the purpose of the “extended

roadmap” was

a customer making an IT decision today would not wait

—they would simply move today, as would many of HP’s current customers.

The market still does not know about it.

20. Numerous HP documents show that Sun and later Oracle were intended

victims of this deception. While the strategy was first and foremost about

. For example, an HP document entitled

Other documents show HP’s use of

HP.

B. HP Made False and Misleading Statements to Analysts, the Press, Its Customers and Potential Customers, and Investors For the Purpose of Preserving Its Profits

21. At all times relevant to this cross-complaint, the following was true: (i)

Intel wanted to stop developing and manufacturing the Itanium microprocessor; (ii) Intel only

continued to manufacture the Itanium microprocessor because HP paid Intel

to do so; (iii) the new versions of Itanium that Intel agreed to release were not

; and (iv)

HP revealed none of this. Instead, beginning in

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and increasing in frequency and desperation to the present date, HP has represented to the public

and its customers that Itanium had a long and vital life, and that Intel was independently

committed to developing technologically superior products under the Itanium line. These

representations were false and misleading and designed to conceal from the public the true status

of the Itanium microprocessor and Intel’s support for it. HP’s false and misleading statements

have caused significant economic harm to Oracle. Oracle has lost customers and business

opportunities, which would not have occurred but for HP’s false and misleading statements.

22. There are numerous examples of false and misleading statements that HP

made to the public. The most pervasive misrepresentation was pointing customers and the public

to Intel as an unbiased, objective and even definitive source of Itanium roadmap information.

HP has regularly cited Intel and pointed customers and industry analysts to Intel as proof that

Intel believes in Itanium and is independently committed to “Intel’s” Itanium roadmap. It has

done so knowing that Intel is , the fixed

length of the agreement, its end date, the minimal performance requirements, or anything that

would qualify Intel’s ostensible commitment to the Itanium roadmap. When Intel does its part,

publishing familiar-looking and unqualified Itanium roadmaps, HP cites those roadmaps or Intel

statements about them as proof of Intel’s commitment. It is an elaborate charade, meant to

convince customers that they need not believe a self-interested party like HP but can trust an

ostensibly unbiased party like Intel.

23. Typical of the HP statements adopting Intel’s Itanium roadmaps are the

following:

On April 27, 2010, Rod Curry, Director of Business Critical Systems

(“BCS”) for HP United Kingdom and Ireland stated that the Itanium

roadmap has “never been clearer” and that “Intel’s commitment is as

strong as it ever has been.”

On July 24, 2008, HP China employee Chen Wusheng stated that Intel

is a “loyal partner for the development of Itanium system” and that HP

is “very confident about the future development of Itanium system on

a basis of its high credibility, capability and flexibility.”

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On June 15, 2010, HP employee Jacob van-Ewyk stated: “The

recently announced HP Integrity servers have a long life ahead of

them. Intel has already disclosed that the new Itanium 9300 processor

will be followed up by Poulson and Kittson . . . . This is the longest

published roadmap in the UNIX business - taking the roadmap out

until around 2017.”

On November 11, 2010, Mr. van-Ewyk stated: “When I visit potential

HP Integrity customers, I often get questions around the Itanium

processor, and the related roadmap. In fact, many non-HP customers

seem to have heard the FUD from our competitors, and are surprised

that Itanium isn’t dead. . . . Intel has offered a public Itanium

roadmap that includes the current Itanium 9300 processor series, a

follow up processor called Poulson, and even a future Itanium

processor called Kittson. Their public roadmap is available as a PDF

and is one of the longer public roadmaps available for mission critical

systems.”

On February 9, 2011, HP Vice President and Chief Technology

Officer for Business Critical Systems Kirk Bresniker stated that HP’s

customers are “excited by Intel’s Itanium roadmap, the longest public

microprocessor roadmap in the industry coupled with the ability to add

multiple generations of higher capacity blades on a slot by slot basis.

To them this means they can count on adding even more capacity

incrementally, extending the life of their infrastructure investments.”

On March 23, 2011, HP released a statement in which it falsely

“reiterated that [HP] will continue the development and innovation of

Itanium-based Integrity server platforms with its HP-UX operating

system using a roadmap that extends more than 10 years.”3

On March 23, 2011, HP employee Cynthia Dreher stated: “Just last

month . . . Intel unveiled technical details about the next Itanium

processor, code named Poulson, with a long and vital roadmap

extending beyond the next 10 years to the Kittson processor.”

On March 30, 2011, in a release entitled “FAQs from HP on the 3 HP Press Release, HP Supports Customers Despite Oracle’s Anti-Customer Actions, Mar. 23, 2011

available at http://www.hp.com/hpinfo/newsroom/press/2011/110323c.html.

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Oracle Itanium Announcement,” HP employee Kristie Popp falsely

stated: “HP, along with key partner Intel, is committed to at least 10

years of development and innovation on its HP-UX operating system

and Itanium-based Integrity servers.”4

On April 5, 2011, HP Vice President of Converged Infrastructure

Strategy Doug Oathout stated: “In this time of uncertainty, HP has

your best interests at heart . . . . [HP will] continue the development

and innovation of the Itanium-based integrity server . . . using a

roadmap extending out beyond the next 10 years. . . . The result: no

upheaval in your current or future plans.”5

24. These and other similar statements were false and misleading because HP

knew at the time they were made that Intel would already be done with Itanium but for the secret

payments from HP and would jettison Itanium as soon as its obligations under the agreements

came to an end. These statements were also false and misleading because at no time did the

Itanium roadmap extend ten years or beyond. In fact, these public statements were part of a

concerted plan “ ” and were clearly

designed to mislead the public and conceal the true state of Itanium.

25. These and other similar statements were also false and misleading because

HP actively concealed the following material information relating to Itanium:

from to the present, Intel was only making Itanium chips because

HP was paying Intel to do so;

the so-called “

the “ ” Itanium chips were to be

and

4 Kristie Popp, 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-Critical-Computing-Blog/FAQs-from-HP-on-the-Oracle-Itanium-Announcement/ba-p/89977.

5 Doug Oathout, Is Your Vendor Confusing Your Wants and Needs for Their Bottomline?, Apr. 5, 2011 available at http://h30507.www3.hp.com/t5/Mission-Critical-Computing-Blog/Is-your-vendor-confusing-your-wants-and-needs-for-their/ba-p/90221.

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HP would

26. HP’s internal statements from the same time period fully demonstrate the

false nature of its public statements regarding Itanium’s vitality. The contrast between what HP

was discussing internally—the truth—and what it was telling the market and its actual and

prospective customers—blatant lies—could not be more stark. Those internal statements include

the following:

27. HP’s numerous false and misleading statements regarding the longevity of

Itanium have damaged Oracle, in the form of lost sales and business opportunities.

C. HP Unlawfully Defamed Oracle Following Oracle’s March 22, 2011 Announcement

28. On March 22, 2011, Oracle announced that it would halt future

development of its software products for the Intel Itanium microprocessor—most specifically

that it would not develop for the Itanium platform the new version of its database, 12g, which

does not even exist yet. Oracle made that decision with no knowledge of the secret HP-Intel

deals, but rather on the basis of the general market signals of the Itanium processor’s decline, the

remarkable market and technical performance of the Xeon processor and conversations Oracle

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executives had with Intel executives confirming that Itanium was nearing its end of life and Intel

was strategically focused on its x86 line.

29. HP knew that what Oracle said about Itanium was absolutely true.

Itanium was already at end of life, with —it’s just

that the market realization or public visibility of that end of life was not yet known because of

HP’s scheme. HP’s internal documents also reveal, for instance, that after Oracle’s

announcement, Intel specifically refused to issue the press release that HP demanded

. An HP executive wrote to an Intel executive:

Despite HP’s emphatic demand, Intel Moreover, HP also

learned that Intel told . As an HP employee

reported

30. Incredibly, despite these direct exchanges from Intel and its own

employees, and direct knowledge that Oracle’s announcement was true, HP publicly reacted with

still more lies, vilifying Oracle in the press, with customers and ultimately in this litigation. HP

claimed that Intel had said no such thing, that Intel was committed to Itanium’s future and there

was no end of life for Itanium, that Oracle had made it all up to damage HP, that Oracle was not

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supporting current Itanium customers and perhaps most absurdly that Oracle had contractually

committed to port its future software products to HP-UX and Itanium.

31. HP’s documents prove those were all outrageous and deliberate lies.

There is explicit recognition in HP’s internal documents that Oracle was not contractually

committed to develop for Itanium,

32. HP’s internal documents also admit that Oracle’s support policies in fact

were broad and generous, that current Itanium customers would be supported until 2018 and that

many of them would not need to upgrade to Oracle’s later software products (particularly the

Oracle database) for a great many years. HP nonetheless chose to defame Oracle at every turn

with allegations that Oracle was refusing to support existing Itanium system users.

33. HP’s defamatory, false and misleading statements regarding Oracle

include, without limitation, the following:

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

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engaging in “a pattern of anti-customer behavior as they move to shore

up their failing Sun server business.”6 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.”7

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 future

of Itanium.8

On or around March 24, 2011, HP disseminated to its Itanium

customers and posted to its website a template “Oracle Customer

letter” that demands “Oracle immediately reverse its decision and

publicly proclaim long-term support for Oracle software on the

Itanium platform.”9 This letter falsely suggests that Oracle

discontinued or otherwise interrupted its support for Oracle’s Itanium-

based software.

On March 28, 2011, HP’s then-CEO Leo Apotheker falsely stated at

HP’s Americas Partner Conference 2011 that Oracle’s Itanium

decision was “anticompetitive[,]” “self-interested” and “to the

endangerment of customers.”10

On March 29, 2011, Michael St. Jean, HP’s Solutions Business

Manager, Enterprise Servers, Storage & Networking Marketing,

6 See Ethan Bauley, 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/HP-comment-on-Oracle-support-for-Itanium-Processors/ba-p/89675.

7 Id. 8 Cynthia Dreher, 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-amp-Intel-are-Committed-to-Long-Future/ba-p/89673.

9 Available at https://h30406.www3.hp.com/campaigns/2011/events/OracleCustomerLetter/OracleCustomerletter.doc. This HP URL opens a Microsoft Word document titled “OracleCustomerletter.doc”.

10 Kevin McLaughlin and Steven Burke, HP CEO Apotheker Slams Oracle For Quitting Itanium, CRN News, Analysis, and Perspective for Vars and Technology Integrators, Mar. 28, 2011, available at http://www.crn.com/news/data-center/229400474/hp-ceo-apotheker-slams-oraclefor-quitting-itanium.htm;jsessionid=MvsnQur0A4BO9hMjB6oNbA**.ecappj01.

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falsely stated: “Many of Larry Ellison’s announcements are meant to

disrupt the market to Oracle’s gain. . . . [W]hat is Larry’s strategy

with the announcement of halting development for the Itanium chip? .

. . [I]t seems obvious that Larry is once again trying to disrupt the

market.”11

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.”12

On April 1, 2011, Patrick Eitenbichler, HP’s Marketing Strategist,

Converged Infrastructure, falsely stated that Oracle’s Itanium decision

was made “without a single consideration for customers who have

made significant investments in Oracle software and Itanium-based

hardware.”13

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 . . . .”14

On June 8, 2011, HP officials falsely accused Oracle of

“disregard[ing] its commitments, and . . . engag[ing] in conduct

designed to deny choice and harm competition . . . .”15

11 Jacob van-Ewyk, HP Integrity and Oracle Support, HP’s Mission Critical Computing Blog, Mar. 29,

2011, available at http://h30507.www3.hp.com/t5/Mission-Critical-Computing-Blog/HPIntegrity-and-Oracle-Support/ba-p/89943 (see comment by HP employee Michael St. Jean in “Comments” section).

12 Kristie Popp, 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-Critical-Computing-Blog/FAQs-from-HP-on-the-Oracle-Itanium-Announcement/ba-p/89977.

13 Kristie Popp, Oracle’s server worldwide shipment figures fell by a startling 40 percent, HP’s Enterprise Business Blogs, Apr. 1, 2011, available at http://h30507.www3.hp.com/t5/Converged-Infrastructure/Oracle-s-server-worldwide-shipment-figures-fell-by-a-startling/ba-p/90077 (quoting Patrick Eitenbichler).

14 Jacob van-Ewyk, 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-to-Cloud/ba-p/90935.

15 Kevin McLaughlin, HP Letter To Oracle Hints Of Legal Action Over Itanium, CRN News, Analysis, and Perspective for Vars and Technology Integrators, June 8, 2011, available at http://www.crn. com/news/data-center/230500088/hp-letter-to-oracle-hints-of-legal-action-overitanium.htm.

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34. HP’s efforts to ” were not its only

defamatory campaign against Oracle. HP also campaigned to initiate investigations by as many

foreign competition authorities as it could bait with the same deceptions.

35. 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 Oracle is arbitrarily causing harm to Itanium users, that

Oracle is refusing to provide support for customers using Itanium-based products, that Oracle has

lied about Itanium’s future prospects and that Oracle has a history and pattern of anti-customer

behavior.

36. 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. In fact, Oracle is fully supporting the current (and many

past) versions of its software on Itanium servers, by issuing bug-fixes per its standard policies.

HP itself admits that most of HP’s Itanium customers using Oracle’s database product are not

even on the current version of the database, 11gR2—and many are still on versions 9 and 10,

with no immediate need to move to a more current version. HP’s lies to the market about

Oracle’s alleged failure to support current versions of its software on Itanium is in direct conflict

with the message HP was urging its own representatives to give to customers. As HP’s own

Vice President of Business Critical Systems Marketing and Strategy wrote two months after

Oracle’s announcement:

In other words, while publicly defaming Oracle with accusations of not supporting existing

Itanium customers, HP secretly reassured some that it wasn’t true and that they would have

Oracle’s support “for many years to come.”

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37. HP continued its defamatory campaign by filing this lawsuit against

Oracle on June 15, 2011—three months after Oracle’s Itanium announcement. The lawsuit

falsely 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. The redacted

complaint, designed to give the impression of a contract where none existed, was an escalation in

the ongoing campaign to deflect attention from HP’s years-long Itanium fraud and to pin the

public blame for its unraveling squarely on Oracle.

38. HP’s defamatory campaign is systematic, widespread and ongoing. It

does not consist of an isolated statement or two, but is a well-orchestrated effort to blame Oracle

for Itanium’s demise, beginning as early as March 23, 2011 and continuing to the present day.

HP has a website dedicated to selling these lies,

http://h18004.www1.hp.com/products/solutions/customers first.html, which has been active

since at least April 2011. HP has also reached out directly to Oracle’s customers. Indeed,

immediately following Oracle’s Itanium announcement, HP drafted and disseminated to its

Itanium customers a template “Oracle Customer letter” that demands “Oracle immediately

reverse its decision and publicly proclaim long-term support for Oracle software on the Itanium

platform” thus falsely suggesting that Oracle discontinued or otherwise interrupted its support for

Oracle’s Itanium-based software . Oracle began receiving identical or substantially similar

copies of this letter from its Itanium customers (with each customer’s individual information

substituted in where necessary) shortly after its announcement. HP 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 similar to HP’s language in its own press

releases and public statements.

39. HP’s false statements have caused substantial customer confusion and

anger, and injury to Oracle’s reputation and existing and prospective customer relations. HP’s

actions have resulted in lost sales of Oracle/Sun servers and lost profits in an amount to be

proven at trial. HP’s defamatory attacks on Oracle have also caused injury to Oracle, among

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them: existing and prospective customers seeking compensation and guarantees from Oracle,

threatening to withdraw or withdrawing their business from Oracle and/or vowing not to do

business with Oracle in the future. Oracle has already expended and continues to expend

substantial resources setting the story straight and assuaging its customers’ unfounded fears.

HP’s conduct has also created serious uncertainty in the marketplace, thereby injuring customers

and competition.

40. Oracle now understands that its real “offense” was telling the truth about

Itanium—and thus unknowingly undermining HP’s plan to lock in its customers to Itanium

longer and keep milking support revenues, until it could develop x86 solutions and migration

strategies on its own timetable. The truth also undermined the

HP was secretly paying to Intel to create the illusion of a long Itanium roadmap essential to its

scheme. All that money and the years of carefully managed secrecy meant nothing if Oracle was

going to stop building new products for HP-UX. Certainly that is not Oracle’s problem, as it had

no obligation to continue to do so, and even if HP had obtain such a “commitment” it would

have been obtained by fraud and deception. In all events, nothing justifies HP’s dishonest efforts

to slander Oracle and double-down on its lies about Itanium’s status and future. Itanium is past

its natural end of life. Since it has been on HP-managed life support, and every appearance

of vitality and relevance has been orchestrated by HP, for the benefit of HP alone, and with utter

disregard for the rights of consumers to make their own informed choices. HP’s world-class

campaign of deception—and its final stage, where HP has attempted to vilify Oracle for telling

the truth—has finally come to light. By this cross-complaint Oracle seeks appropriate redress for

itself and the general public.

///

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FACTUAL ALLEGATIONS REGARDING CLAIMS FOR FRAUDULENTLY INDUCING ORACLE TO ENTER INTO THE HURD AGREEMENT

41. In addition to defrauding the market and inflicting harm on Oracle’s server

business, HP also fraudulently induced Oracle to enter into the very contract at the heart of its

lawsuit against Oracle—the Hurd Agreement—under which HP falsely alleges that Oracle

promised to forever port its software to HP’s Itanium platform.

A. The Oracle and HP Relationship, and Oracle’s Acquisition of Sun

42. The Hurd Agreement arose in the context of what was once a

complementary, but then became an increasingly competitive, relationship between Oracle and

HP. For many years, Oracle and HP had a relationship that followed naturally from the way

their individual self-interests 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 they also often

worked towards commonly-held goals without any contractual commitment, 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.

43. The companies’ relationship changed as their previously aligned interests

began to diverge. As noted, 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

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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 directly

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 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 routinely competed against each other in the sale

of computer server systems, and in that setting have appropriately not acted as partners in any

sense of the term. Oracle, of course, had no idea that, far above and beyond any lawful

competition, HP had furthered and doubled down on its deception regarding Itanium, with a

specific goal of crushing Sun, driving Oracle from the server market, and even acquiring the Sun

assets from Oracle when HP’s plan succeeded.

B. The Hurd Agreement

44. Any 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 five-year 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 had declined

approximately 45 percent in just over a year since Mr. Hurd was ousted, and its shareholders had

lost over $55 billion in market capitalization. Mr. Hurd was also highly respected by Oracle’s

management. 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.

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45. 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 the next day, alleging that he would

“inevitably” violate his confidentiality obligations to HP and reveal HP’s secret information to

Oracle.16 HP sought “immediate injunctive relief to protect its trade secrets and confidential

information from Hurd’s threatened misappropriation” and “to require Hurd to honor his legally

binding trade secret protection agreements with HP.”17 But a lawsuit premised on the “inevitable

disclosure” of one’s trade secrets is baseless as a matter of 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.

46. Significantly, HP’s lawsuit did not name Oracle as a defendant. In fact,

the day after filing the Hurd litigation, HP’s then-acting CEO Cathie Lesjak expressly stated: “I

think the clarification I need to make is that we actually have not filed suit against Oracle. We

have actually filed suit against Mark. . . . In terms of how it’s going to affect our relationship

with Oracle . . . , ultimately, we will go back to being good partners . . . .”18 HP also clarified to

its employees that it had not filed any lawsuit against Oracle. In short, HP did not sue Oracle,

never intended to sue Oracle, and made clear publicly that the only redress it sought was against

Mr. Hurd. HP never intended to obtain any sort of commitment or obligation from Oracle as a

16 See Ex. B (Hewlett-Packard Company v. Hurd, Case No. 110CV181699 (Santa Clara County

Superior Court) (Sept. 7, 2010)). 17 Id. at ¶ 2. 18 Ethan Bauley, Cathie Lesjak remarks at Citi Technology Conference: R&D, 3PAR, Mark Hurd,

Oracle, and more, Data Central, the official HP corporate blog, Sept. 11, 2010, available at http://h30507.www3.hp.com/t5/Data-Central/Cathie-Lesjak-remarks-at-Citi-Technology-Conference-R-amp-D-3PAR/ba-p/82391 (quoting an interview Ms. Lesjak gave at Citigroup’s Global Technology Conference on September 8, 2010) (emphasis added).

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result of its lawsuit against Mr. Hurd, but simply intended to go back to being “partners” in the

way the companies were before Oracle hired Mr. Hurd.

47. Despite its proclaimed desire to be “good partners” with Oracle, HP’s

meritless litigation against Mr. Hurd further damaged its 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.”19

48. HP signaled its desire to settle the Hurd action one day after it was filed.

At the time, this appeared to be no more than an acknowledgement that HP had no chance of

winning its case against Mr. Hurd. However, discovery obtained in this action has revealed that

HP had an additional hidden and more strategic agenda. HP had been interviewing and was on

the verge of hiring into its most senior leadership positions two people—Léo Apotheker and Ray

Lane—whom HP knew would ensure the complete destruction of what was left of the Oracle-HP

relationship. Moreover, HP desperately sought to conceal from Oracle (as well as the public)

that it was paying Intel to extend Itanium’s natural life, because HP knew

that that Oracle had no obligation to continue developing its software for Itanium under its

existing “partnership” with HP and that such news would cause Oracle to stop developing its

software for such a dying platform. Knowing that Messrs. Apotheker and Lane were toxic to any

“partnership” with Oracle, and that the truth of Itanium’s future would have killed any hope that

Oracle would continue its Itanium efforts, HP tried to use the settlement of its lawsuit against

Mr. Hurd 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—i.e., contractual

19 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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commitments that bore no connection to the Hurd litigation or the relief HP sought (or ever could

have obtained) from Mr. Hurd therein. Though Oracle plainly and unambiguously rejected the

notion of making any such commitments, HP nonetheless asserts in this litigation that Oracle did.

49. Léo Apotheker had previously been the CEO of Oracle’s biggest

applications software competitor, SAP AG. As is now clear, Mr. Apotheker knew next to

nothing about HP’s core businesses. The only logical explanation for his hiring, now affirmed

by HP’s subsequent 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 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

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than 100 miles from the trial courthouse—which meant staying out of HP’s Palo Alto

headquarters for weeks.

50. 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.

51. Negotiation of the Hurd Agreement took place between September 8

and 20, 2010, at the same time HP was recruiting and 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 HP’s objectively baseless employment lawsuit against Mr. Hurd.

Furthermore, the very last thing Oracle would have agreed to do was sign a document

reaffirming any kind of Oracle-HP “partnership.” HP thus intentionally and actively concealed

this information from Oracle while negotiating the Hurd Agreement. The HP personnel and

Board members involved with the Hurd litigation—including HP’s general counsel and

corporate secretary, Michael J. Holston, who was directly involved in negotiating the Hurd

Agreement—unequivocally knew of HP’s plans to hire Messrs. Apotheker and Lane while the

Hurd negotiations occurred. Indeed, in an email Mr. Apotheker sent to Mr. Hurd on October 2,

2010, Mr. Apotheker expressly admitted that he was “in intense discussions . . . with the HP

board” at the time Oracle announced Mr. Hurd as its new Co-President—i.e., on September 6,

2010, before HP filed its lawsuit against Mr. Hurd. Mr. Holston and others thus expressly knew

while negotiating the Hurd Agreement that HP was simultaneously in the process of hiring, to its

most senior positions, two long-time Oracle foes.

52. From the beginning of the Hurd negotiations, HP requested from Mr. Hurd

the very protections it sought in its complaint—namely, stringent restrictions on Mr. Hurd’s

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disclosure of HP’s trade secrets and confidential information via restrictions on his 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 used the occasion to seek independent and unrelated commitments from

Oracle that unquestionably were outside the scope of HP’s suit against Mr. Hurd or any relief HP

sought or could have obtained in that suit. These terms included not only the language

“reaffirming” the parties’ “partnership,” but also business restrictions that had no connection or

relation to the Hurd litigation at all. HP indisputably could not have obtained—and did not even

seek— these concessions from Mr. Hurd, or through the courts on account of any claim in the

Hurd litigation. It was an opportunistic ploy related only to the in terrorem value of suing

Mr. Hurd, and was made for the purpose of calming the companies’ shared customers who were

upset by the very public break signaled by HP’s filing of the lawsuit and Mr. Ellison’s public

acknowledgment that the suit had damaged the relationship. Oracle agreed to these terms, in

particular the “reaffirmation” provision, simply because Oracle believed they would mollify

HP’s paranoia without imposing any real obligations on Oracle. Oracle would not have agreed

to any part of 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.

53. Paragraph 1 of the final Hurd Agreement20—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, three days after HP

first communicated its desire to settle its lawsuit against Mr. Hurd. Ms. Livermore asked

Ms. Catz to publicly reaffirm the historical Oracle-HP “partnership,” which Ms. Catz understood

to mean that Oracle and HP 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

20 Ex. A (Hurd Agreement (Sept. 20, 2010)).

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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.

54. 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.

55. 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. Referring to that provision, Ms. Daley stated

(emphasis added):

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 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.

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56. In the same email, Ms. Daley attached a draft 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.

57. 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.”

58. 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.

59. As a result, in its very next draft of the agreement, dated September 13,

2010, HP again proposed specific language setting forth explicit obligations, among them that

Oracle would (i) continue software development for HP’s Itanium platform (HP-UX), and (ii)

maintain its software pricing. HP’s new language for 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

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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.

60. Oracle again 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.” 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.

61. 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 and other software to run on the Itanium platform.”21 HP suggests it is irrelevant that

the Itanium platform is dying and has no future; that, consistent with the partnership, Oracle has

discontinued software development for other obsolete HP platforms; that HP’s other “partners”

have discontinued software development for Itanium as well; and that Oracle and HP had an

express, carefully limited Itanium porting agreement that does not cover the commitments HP

21 Joint Case Management Conference Statement, Aug. 5, 2011, p. 5 (HP position statement).

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now seeks. Paragraph 1, according to HP, trumps all and creates a perpetual software

development commitment by Oracle at no cost to HP.

62. Oracle emphatically denies that HP has any rights to continued software

development or guaranteed pricing under Paragraph 1 of the final Hurd Agreement, or that any

such rights existed in the Oracle-HP “partnership” before the Hurd Agreement was signed.

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 following material facts: (1) that

Intel wanted out of Itanium but had only been producing the chip—and had only promised to do

so for a finite additional period of time—in return from HP;

and (2) that HP was seeking to impose a similar development commitment on Oracle—but at no

cost to HP and with no time restrictions—while planning to hire Messrs. Apotheker and Lane as

HP’s new management team. Oracle would not have signed on to any agreement with HP 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, or

include any language—even loose—regarding the parties going back to a previous state of

affairs. To the extent HP obtained the rights it claims in this suit, it did so by fraud.

63. Unaware of HP’s secret Itanium campaign, and of its 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 a joint press release that

same day in which they reaffirmed their so-called “partnership.”

64. 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

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to be highly valued at H-P these days—a dislike of Oracle.”22 An All Things Digital reporter

referred to Mr. Lane’s hiring as “a jab at Oracle.”23

FIRST CAUSE OF ACTION

(Violation of the Lanham Act, 15 U.S.C. § 1501 et seq.)

65. Oracle incorporates by reference the allegations in Paragraphs 1 through

64 above as though fully set forth herein.

66. HP has engaged in the following, non-exhaustive list of conduct

proscribed by section 43(a) of the Lanham Act, 15. U.S.C. § 1125(a):

Knowingly making and causing to be made false and deceptive statements to

Oracle and the public in connection with the sale and advertisement of its

Itanium products. These false and deceptive statements were made regarding

Itanium’s status and future and Intel’s commitment thereto, including without

limitation that Intel is independently committed to developing multiple

generations of Itanium chips under an Itanium roadmap that extends for more

than ten years from March 2011. These false and deceptive statements were

made in interstate commerce with the intent to deceive the public. These false

and deceptive statements deceived and are likely to deceive the public,

including Oracle’s and HP’s Itanium customers and prospective Oracle and

HP customers. These misstatements are material, in that they influenced and

are likely to influence the public’s purchasing decisions.

Knowingly disseminating false, deceptive and defamatory statements to its

customers and the marketplace in connection with the sale and advertisement

of its Itanium products. These false, deceptive and defamatory statements

22 Jennifer Valentino-DeVries, 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-new-ceo/.

23 John Paczkowski, 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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were made regarding Oracle, including without limitation that Oracle is the

cause of Itanium’s demise, 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. These false and deceptive

statements were made in interstate commerce with the intent to deceive the

public. These false and deceptive statements deceived and are likely to

deceive the public, including Oracle’s and HP’s Itanium customers and

prospective Oracle and HP customers. These misstatements are material, in

that they influenced and are likely to influence the public’s purchasing

decisions.

67. HP’s false and deceptive advertising has and will deceive the public and

cause a loss of Oracle’s sales. Oracle and the public will likely continue to suffer such injury

unless HP’s conduct is enjoined and restrained by the Court. Oracle therefore seeks an

injunction pursuant to section 43(a) of the Lanham Act, 15. U.S.C. § 1125(a), prohibiting HP

from engaging in the unlawful and deceptive conduct described above.

68. Oracle has suffered injury as a direct and proximate result of HP’s false

and deceptive advertising. Due to HP’s false and deceptive statements about Itanium’s future,

Oracle, customers and potential customers have been actually deceived, and Oracle has lost

potential sales in both the hardware and software markets.

69. Oracle seeks monetary damages pursuant to sections 35 and 43(a) of the

Lanham Act, 15. U.S.C. §§ 1117(a), 1125(a), to recover HP's profits, damages sustained by

Oracle and the costs of the action.

70. HP’s intentional and willful dissemination of false statements regarding its

Itanium products and Oracle make this an exceptional case under section 35 of the Lanham Act,

15 U.S.C. § 1117(a), and thus Oracle is entitled to an award of reasonable attorney’s fees and

costs.

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SECOND CAUSE OF ACTION

(Violation of Cal. Bus. & Prof. Code § 17500 et seq.)



72. HP has engaged in the following non-exhaustive list of conduct proscribed

by California Business and Professions Code section 17500 et seq.:

Knowingly making and causing to be made false and deceptive statements to

Oracle and the public regarding Itanium’s status and future and Intel’s

commitment thereto, including without limitation that there is a long ten-year

roadmap for multiple generations of Itanium chips that Intel fully supports.

These material misstatements were made with the intent to secure from Oracle

and the public commitments and obligations with respect to the purchase

and/or support of HP’s Itanium products. The material misstatements

deceived and are likely to deceive Oracle and the public, including Oracle’s

and HP’s Itanium customers.

Knowingly failing to disclose to Oracle and the public material information

regarding Itanium’s status and future, including without limitation its secret

agreements to pay Intel to continue producing

the Itanium chip beyond the product’s natural life. These material omissions

were made with the intent to secure from Oracle and the public commitments

and obligations with respect to the purchase and/or support of HP’s Itanium

products. The material omissions deceived and are likely to deceive Oracle

and the public, including Oracle’s and HP’s Itanium customers.

73. HP had a duty to disclose material information to Oracle and the public

when it undertook to make public representations about Itanium’s longevity. Instead, HP

knowingly and actively concealed information from Oracle and the public.

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74. HP had exclusive knowledge of this information—Oracle and the public

did not know and could not have known about Itanium’s real longevity. Accordingly, Oracle

was unable to compete on a level playing field and lost business opportunities.

75. Oracle has suffered injury in fact and has lost money or property as a

direct and proximate result of HP’s unlawful and deceptive conduct, and will continue to suffer

such injury unless HP’s conduct is enjoined and restrained by the Court. Oracle therefore seeks

an injunction pursuant to California Business and Professions Code section 17535 prohibiting

HP from engaging in the unlawful and deceptive conduct described above.

76. Moreover, HP was unjustly enriched as a direct and proximate result of

HP’s unlawful and deceptive conduct. Oracle seeks restitution pursuant to California Business

and Professions Code section 17535 to restore to Oracle all monies HP acquired as a result of its

unlawful and deceptive conduct.

THIRD CAUSE OF ACTION

(Violation of Cal. Bus. & Prof. Code § 17200 et seq.)



78. HP has engaged in the following non-exhaustive list of unlawful, unfair

and deceptive business practices:

Making false and deceptive statements to Oracle and the public regarding

Itanium’s status and future and Intel’s commitment thereto, including without

limitation that there is a long ten-year roadmap for multiple generations of

Itanium chips that Intel fully supports. These material misstatements

deceived and are likely to deceive Oracle and the public, including Oracle’s

and HP’s Itanium customers.

Failing to disclose to Oracle and the public material information regarding

Itanium’s status and future, including without limitation its secret agreements

to pay Intel to continue producing the Itanium

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chip beyond the product’s natural life. These material omissions deceived and

are likely to deceive Oracle and the public, including Oracle’s and HP’s

Itanium customers.

Disseminating false, deceptive and defamatory statements to its customers and

the marketplace regarding Oracle, including without limitation that Oracle is

the cause of Itanium’s demise, 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. These false,

deceptive and defamatory statements deceived and are likely to deceive the

public, including Oracle’s and HP’s Itanium customers.

Making false representations and material omissions of fact to Oracle and the

public in connection with the sale and advertisement of its Itanium products in

violation of California Business and Professions Code section 17500 et seq.,

as explained above.

Making false representations and material omissions of fact to Oracle and the

public in connection with the sale and advertisement of its Itanium products in

violation of the Lanham Act, 15 United States Code section 1501 et seq., as

explained above.

79. HP had a duty to disclose material information to Oracle and the public

when it undertook to make public representations about Itanium’s longevity. Instead, HP

knowingly and actively concealed information from Oracle and the public.

80. HP had exclusive knowledge of this information—Oracle and the public

did not know and could not have known about Itanium’s real longevity. Accordingly, Oracle

was unable to compete on a level playing field and lost business opportunities.

81. Oracle has suffered injury in fact and has lost money or property as a

direct and proximate result of HP’s unlawful, unfair and deceptive conduct, and will continue to

suffer such injury unless HP’s conduct is enjoined and restrained by the Court. Oracle therefore

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seeks an injunction pursuant to California Business and Professions Code section 17203

prohibiting HP from engaging in the unlawful, unfair and deceptive conduct described above.

82. Moreover, HP was unjustly enriched as a direct and proximate result of

HP’s unlawful, unfair and deceptive conduct. Oracle seeks restitution pursuant to California

Business and Professions Code section 17203 to restore to Oracle all monies HP acquired as a

result of its unlawful, unfair and deceptive conduct.

FOURTH CAUSE OF ACTION

(Defamation – Libel)



84. 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 Paragraph 33 above.

85. 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.

86. 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.

87. 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.

88. 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

knowledge of their falsity, or with reckless disregard of their truth or falsity and with the

intention of causing injury to Oracle.

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89. 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.

FIFTH CAUSE OF ACTION

(Intentional Interference with Contractual Relations)



91. 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.

92. HP has knowledge of these valid contractual relationships.

93. HP’s intentional actions and conduct, including without limitation those

set forth in Paragraphs 29-40 above, were and are designed to induce a breach and/or disruption

of Oracle’s contractual relationships with its existing customers.

94. 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.

95. 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.

96. 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.

97. 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.

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SIXTH CAUSE OF ACTION

(Intentional Interference with Prospective Economic Advantage)



99. 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.

100. 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

29-40 above, designed to disrupt Oracle’s customer relationships.

101. 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.

102. 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.

103. 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.

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SEVENTH CAUSE OF ACTION

(Fraud / Equitable Rescission)



105. HP fraudulently induced Oracle to enter into the Hurd Agreement by

actively concealing material information, namely, that: (1) HP was secretly paying Intel

to continue producing the Itanium chip and represent to the public its “long-

term” commitment thereto when Intel otherwise would have ceased Itanium development, and

(2) HP was in the 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. HP had exclusive knowledge of

this information—it understood that Oracle did not know and could not have known of these

material facts.

106. HP understood that had Oracle known of HP’s deal with Intel to

artificially extend Itanium’s lifespan, Oracle would not have agreed to continue software

development for Itanium in perpetuity as HP alleges Oracle did pursuant to Paragraph 1 of the

Hurd Agreement.

107. Moreover, given the well-documented animosity between Oracle and

Messrs. Apotheker and Lane, HP knew that had Oracle known of HP’s imminent plans to hire

these individuals, Oracle would not have signed the Hurd Agreement, especially any

“partnership” commitments or other business restrictions (e.g., Paragraph 7 of the Hurd

Agreement) unrelated to Mr. Hurd’s move to Oracle.

108. HP had a duty to disclose this exclusively-held material information.

Instead, HP knowingly and actively withheld this information from Oracle with the intent to

fraudulently induce Oracle to enter into the Hurd Agreement.

109. In addition to concealing this information from Oracle, HP made

representations to Oracle in the context of negotiating the Hurd Agreement regarding Itanium’s

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future and HP’s alleged desire for an ongoing “partnership.” HP knew that these affirmative and

incomplete statements of its intentions were likely to—and did—mislead Oracle.

110. Oracle did not know and could not have known during negotiation of the

Hurd Agreement that HP had entered into secret agreements with Intel, or that HP was secretly

in the process of hiring senior executives whose interests were in sharp conflict with Oracle’s.

Moreover, because there was no actual, threatened or contemplated judicial or quasi-judicial

proceeding between HP and Oracle at the time of HP’s fraud—and in fact, HP had publicly

represented that it had no intention of bringing any legal claims against Oracle—Oracle had and

expected no opportunity to present any claim or defense or to conduct any discovery regarding

the subject matter of its negotiations with HP in any legal proceeding. Moreover, HP’s fraud did

not go to the subject matter of the dispute that was in litigation, its purported trade

secrets/employment claim against Mr. Hurd. HP’s fraud was thus extrinsic.

111. Ignorant of HP’s plans regarding Itanium and Messrs. Apotheker and

Lane, Oracle was induced to enter into the Agreement. Had Oracle known these material facts,

Oracle would not have signed the Agreement nor bound itself to any of the obligations contained

therein, regardless of scope or specificity, including the business restrictions on it.

112. Oracle’s reliance was reasonable and justifiable.

113. Oracle has suffered injury as a direct and proximate result of HP’s fraud.

114. Oracle seeks equitable 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, including attorneys’ and other fees expended in defending

against HP’s lawsuit and prosecuting this cross-complaint, in an amount to be proven at trial.

115. HP’s conduct was malicious, oppressive and fraudulent, and Oracle is

therefore entitled to an award of punitive and exemplary damages.

///

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PRAYER FOR RELIEF

WHEREFORE, Oracle prays for judgment against HP as follows:

1. Equitable rescission of the Hurd Agreement;

2. General and special damages in an amount to be proven at trial;

3. Punitive damages as permitted by law;

4. 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. Reasonable attorneys’ fees as permitted by law;

6. Costs of suit herein incurred; and

7. 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: December 2, 2011 LATHAM & WATKINS LLP Daniel M. Wall By /Daniel M. Wall

Daniel M. Wall Attorneys for Defendant and Cross- Complainant Oracle Corporation

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