Oracle liable for $3 billion to HP on breach of contract

Contract disputes can be for a few dollars over a small agreement between friends; conversely, they can range into the billions of dollars when two giant technology companies are fighting over a contract that went astray. The latter category is applicable to the contract fight between Oracle Corp. and Hewlett Packard over the Itanium chip. The dispute came to a major climax recently when a California state court jury awarded Hewlett Packard $3 billion in damages after finding that Oracle was in breach of contract by failing to provide promised software for the chip.  

The legal issue in the case appears to be fairly straightforward. The jury decided that Oracle breached the agreement to provide support to the Itanium and that the breach cost HP considerable revenue. With deliberations taking only five hours, it appears that the jury found the breach by Oracle to be clear-cut.

Oracle has already announced an intent to appeal the largest verdict recorded in the United States this year. Oracle decided in March 2011 to stop future software development for the Itanium. In 2012, a judge ruled that Oracle had to keep providing software for the Itanium. Apparently, the company did not live up to the court order.

Another jury in California disbelieved Oracle’s defense in a dispute with Google about a month ago. The jury entered a $9 billion verdict against Oracle by illegally interfering in Google’s Android phone business. Oracle will survive these breach of contract bumps because it has $56 billion cash in hand. Whether it can take more public relations debacles like these two without incurring major negative impact is another question.

Source: Bloomberg, “Oracle Loses $3 Billion Verdict for Ditching HP Itanium Chip“, Robert Burnson, Kartikay Mehrotra, and Brian Womack, June 30, 2016

Tags: Contract Disputes

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