Updated: A day after becoming Oracle's co-president, Mark Hurd is facing a lawsuit from Hewlett-Packard over trade secrets and confidentiality agreements.
The lawsuit was filed in Santa Clara County in California. Non-compete clauses generally don't hold up in California. However, HP is alleging that Hurd has trade secrets and can hurt the company's business. Hurd resigned from HP last month following a sexual harassment probe. Oracle CEO Larry Ellison defended Hurd and then quickly hired him.
In a blog post, HP said:
Despite being paid millions of dollars in cash, stock and stock options in exchange for Hurd’s agreements to protect HP’s trade secrets and confidential information during his employment and following his departure from his positions at HP as Chairman of the Board, Chief Executive Officer, and President, HP is informed and believes and thereon alleges that Hurd has put HP’s most valuable trade secrets and confidential information in peril. Hurd accepted positions with Oracle Corporation (“Oracle”), a competitor of HP, yesterday as its President and as a member of its Board of Directors. In his new positions, Hurd will be in a situation in which he cannot perform his duties for Oracle without necessarily using and disclosing HP’s trade secrets and confidential information to others.
According to HP's complaint, the company is seeking an injunction "to protect its trade secrets and confidential information." HP is arguing that there's no way that Hurd will be able to meet his confidentiality responsibilities as part of Oracle. Hurd walked away with a severance payment of more than $12 million as well as stock. The total package could be worth more than $30 million at HP's current stock price. Here's a look at the key excerpt:
Among HP's primary beefs with Hurd's move to Oracle:
- Hurd has information about HP's employees and how they are ranked.
- Has knowledge of HP's proprietary designs and supplier relationships.
- Is under a bevy of non-disclosure agreements.
- Can't solicit HP employees, customers and suppliers.
- And knows all about HP's future plans and roadmaps.
In other words, HP also jabs at Hurd's omission of his old company when talking about Oracle's Exadata machine.
In Hurd's separation agreement, filed with the Securities and Exchange Commission, the key item appears to be this clause.
"Continuing Obligations. You acknowledge and affirm your continuing obligations under the HP Agreement Regarding Confidential Information and Proprietary Developments you signed on February 6, 2008, February 26, 2009 and February 12, 2010, (the "Confidentiality Agreements"); provided, however, that you hereby agree that Section 7 of the Confidentiality Agreement (Protective Covenants) shall apply for the period of twenty-four (24) months commencing on the Separation Date and; provided, further, that you agree that Section 2 of the Confidentiality Agreement (Confidential Information) shall apply at all times following the Separation Date".
Oracle had to see this lawsuit coming and assumed Hurd wouldn't be hit by any injunction HP may bring.
HP is seeking damages, an injunction and attorney fees.
Oracle has responded to the HP lawsuit against Hurd. Here's what Oracle said:
“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."
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Here's the complaint: