September 21, 2010 / 12:45 AM / 7 years ago

HP and Hurd settle lawsuit over hiring at Oracle

<p>Mark Hurd, co-president of Oracle, addresses the audience at the annual Oracle OpenWorld conference held at the Moscone Center in San Francisco, September 20, 2010. REUTERS/Stephen Lam</p>

SAN FRANCISCO (Reuters) - Hewlett-Packard Co has settled a legal dispute over Oracle Corp’s hiring of Mark Hurd, as the two companies moved to publicly mend fences and put the contentious issue behind them.

The companies said in a joint statement on Monday that “Hurd will adhere to his obligations to protect HP’s confidential information while fulfilling his responsibilities at Oracle,” but did not provide further details.

Hurd agreed to modify the terms of his separation agreement, waiving his rights to roughly 345,000 restricted stock units, which were granted to him in January 2008 and December 2009.

It was not immediately clear how much of Hurd’s original exit package -- which had been estimated at $34.6 million -- would be affected by the settlement.

Based on the amount of stock units and HP’s Monday close of $39.39 in New York, the shares Hurd would give up could be worth nearly $13.6 million.

Representatives from HP and Oracle declined to comment when asked whether the settlement would impact Hurd’s role at Oracle.

Hurd’s separation deal with HP did not include a non-compete provision, which is generally unenforceable in California, but did include a 2-year confidentiality pact.

Hurd was named Oracle co-president on September 6, a month after he was ousted in a controversial fashion from HP, where he had been chief executive since 2005. HP said he filed inaccurate expense reports related to a female contractor.

HP sued Hurd shortly after Oracle hired him, seeking to block him from joining the company. HP said Hurd’s hiring by the rival technology firm put HP’s trade secrets “in peril.”

HP is the world’s largest technology company by revenue, a dominant force in PCs, servers, IT services and printers. Oracle is the third-largest software company.

HP’s case against Hurd was widely seen as unlikely to succeed, and legal experts said the settlement allowed the company to claim a small victory.

“HP said we’re not going to stop him from working, but we are going to take some of his money back,” said Stephen Kramarsky, a partner with law firm Dewey Pegno & Kramarsky, who has litigated employment cases involving trade secret issues.

“HP has an obligation to work as hard as they can for their shareholders and get every penny it can back,” Kramarsky said.

PARTNERSHIP REAFFIRMED

Hurd’s departure from HP touched off an ugly spat with Oracle, its long-time partner and more recent rival. The companies are competing directly in the computer server market, following Oracle’s purchase of Sun Microsystems.

Oracle CEO Larry Ellison, a good friend of Hurd‘s, blasted HP’s board -- first for pushing Hurd out, and later for trying to block Oracle from hiring him.

HP interim CEO Cathie Lesjak acknowledged that the relationship between the two companies had been “strained” by the matter.

But HP and Oracle reaffirmed a commitment to their partnership on Monday. Oracle’s software runs on HP’s server and storage products, and the companies have more than 140,000 joint customers.

“Oracle and HP will continue to build and expand a partnership that has already lasted for over 25 years,” Ellison said in a statement.

HP sued Hurd on September 7, alleging breach of contract, and threatened misappropriation of trade secrets, but legal experts said the company faced an uphill battle in its lawsuit.

HP argued in its complaint that Hurd “cannot separate out HP’s trade secrets and confidential information in performing his daily duties at Oracle.”

But employment and intellectual property lawyers said California courts have not been receptive to the doctrine of so-called “inevitable disclosure.”

Shares of HP closed at $39.39 on the New York Stock Exchange and rose to $39.70 in extended trading.

Shares of Oracle closed at $27.49 on Nasdaq and were little changed after hours.

Reporting by Gabriel Madway; Editing by Robert MacMillan, Andre Grenon and Richard Chang

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