Supreme Court to Oracle: Pay Up

The U.S. Supreme Court has declined to hear IT giant Oracle's appeal to overturn a ruling by a lower court ordering the company to pay $3 billion in damages for violating a contract agreement with HP.

In June 2011, before Hewlett-Packard had split into Hewlett Packard Enterprise (HPE) and HP, the company sued Oracle for its refusal to add Itanium support to its database software. Oracle claimed it explicitly refused requests to support Intel's Itanium processors at the time the contract between the two companies was made, while HP alleged that by refusing, Oracle had violated a contract agreement.

Become a Subscriber

Please purchase a subscription to continue reading this article.

Subscribe Now

When Oracle hired HP's former Chief Executive Officer, the late Mark Hurd, the two companies struck an agreement acknowledging that both companies had a "longstanding strategic relationship" and a "mutual desire to continue to support their mutual customers." Oracle said it "will continue to offer its product suite on HP platforms," and HP said it "will continue to support Oracle products (including Oracle Enterprise Linux and Oracle VM) on its hardware."

HP interpreted this agreement as a commitment by Oracle to provide its database suite on HP's Intel Itanium-powered systems.

Oracle, on the other hand, claimed, that HP secretly knew that Intel was no longer committed to its Itanium line of processors and roped it into providing long-term support for its Itanium systems anyway. When Oracle discovered the Itanic was effectively doomed, it said it would no longer support the hardware – but HP sued Oracle and won.

Oracle has argued that the full $3 billion penalty is unfair. It said it should not have to pay the part of the damages related to comments it made that it claims should be protected by the First Amendment – and therefore should not be subject to penalization.

"The California courts entered a $3 billion dollar damages award in this case – one of the largest civil awards in California history – that is based in part on conduct protected by the Petition Clause of the First Amendment," the company told the Supreme Court.

The Supreme Court’s rejection means Oracle has exhausted all means of recourse and the lawsuit is finally over; it has no choice but to pay HPE $3 billion.