HP Hunts Former CEO Hurd To Hurt Oracle Over Hire

Last Updated Sep 9, 2010 10:50 AM EDT

Only yesterday I wrote of the reasons why Oracle (ORCL) CEO Larry Ellison would regret hiring former Hewlett-Packard (HPQ) CEO Mark Hurd as a co-president of his company. The one thing I failed to mention was that HP is, of necessity, a big business partner of Oracle, and that irritating the people who are responsible for large amounts of your income is unwise. Now HP has filed suit against Hurd, alleging that Hurd has put the company's "most valuable trade secrets and confidential information in peril" and will be unable to work at Oracle without doing so. In other words, HP can't yank out of Hurd's brain what he knows of the company and its strategies and operations, and now he's working for a competitor.

It's an ugly situation, but one that shouldn't surprise. Despite all the billions such companies as HP, Oracle, IBM (IBM), Dell (DELL), Microsoft (MSFT), EMC (EMC), and Cisco (CSCO) make, they represent the cracking edifice of an industry. Stepping on each other's toes and taking aim at existing business partners will only grow over time as big companies scramble to keep growing. There's just one problem: the industry is mature, people and companies have moderated their spending, and the quest to grow -- ever a driving mania in high tech -- has become the need to take business from anyone and everyone else. Given the size of these companies, that means a lot of poaching, and the inevitable clashes that will happen.

The bow shots are zipping back and forth heavily at this point. You can see HP's court filing below:

Court Filing: HP Civil Complaint Against Mark Hurd
Meanwhile, Oracle shot back in a terse statement::
"Oracle has long viewed HP as an important partner," said Oracle CEO Larry Ellison. "By filing this vindictive lawsuit against Oracle and Mark Hurd, 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."
Let's take apart what both sides are doing. Technically, the Oracle statement is inaccurate as HP technically filed suit only against Hurd, who signed non-disclosure and non-compete agreements to walk away with his bundle of cash.

Now for the howevers. HP is in difficult waters because it, Oracle, and Hurd are all in California, whose Supreme Court nixed employee non-competes a couple of years ago. That's why HP has emphasized Oracle as competition and the trade secret issues, which still have some weight. And given that Oracle mentions HP by name as a competitor in its latest filed 10-K, it will be hard to wiggle out of that trap.

All the outrage is poppycock. HP could have predicted that Hurd would end up at a competitor and that California law was none too friendly to keeping him locked down. (In other words, if you're going to pay off a former employee, make sure you can make it stick. My BNET colleague Marion Maneker saw the action as more proof of HP's board problems.) At the same time, Oracle could have expected nothing less than a direct or indirect barrage, given that it wants to sell Sun Solaris boxes in the place of HP units.

So why did two old partners, which not long ago announced a dually-developed database-centric server line, go after each other? Because business-as-usual in the industry is over, and everyone on the inside knows it, so all the gloves are off. Oracle tries to put the screws to Google. Nokia (NOK) sues Apple, which sues HTC. HP sues Oracle via Hurd as proxy. When times get desperate, people can get ugly. Expect to see a lot more of the same, and worse, going forward.

Related: Image: RGBStock.com user RWLinder, standard site license.
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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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