Within weeks of his precipitate resignation as CEO and ignominious departure from HP in the aftermath of a sexual harassment and fiddled expenses investigation by the company, Mark Hurd has been appointed co-president of Oracle by his old chum Larry Ellison. HP is not amused and is suing Hurd over trade secrets and breach of confidentiality agreements. Martyn Warwick reports.
In a lawsuit filed in Santa Clara County, California, HP contends that its erstwhile CEO, and the man generally credited with bringing HP's diverse portfolio back into focus after the company had been driven off-course by his predecessor, Carly Fiorina, was privy to secret information that he could now wield to the commercial detriment of HP.
In an authorised and unusually blunt and outspoken blog posting an HP spokesperson writes, "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."
Thus, HP has gone to law "to protect its trade secrets and confidential information.”
Among other things, HP specifically alleges that Mark Hurd has information about HP’s employees and how they are ranked, has knowledge of HP’s proprietary designs and supplier relationships, is covered by and subject to a welter of non-disclosure and non-compete agreements freely entered into, and has deep insider knowledge of HPs plans and corporate roadmaps. He is also s debarred from "soliciting or persuading information out of HP employees, customers and suppliers."
When a company falls out with one of its top bods, it's commonplace for the corporation to invoke "non-compete" and "confidentiality" clauses in contracts, but the fact of the matter is that they are rarely, if ever, enforceable. Certainly they won't and don't stand up under European law and few are ever upheld in California.
Nonetheless, HP is serious in its intent and has the long pockets necessary to fund a protracted fight.
Thus the company has published excerpts of the agreement Hurd signed last month when he finally severed all contact with HP for a cash consideration of more rtha US$12 million (tax free) and stock allocations that brings his "compensation" package up to a value of more than $30 million.
The agreement has been duly filed with the US Securities and Exchange Commission in New York and the seemingly most relevant clause in it, and the one that HP seems to be pursuing the most rigourously, comes under "Continuing Obligations".
The agreement states, "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”.
Not only does HP want to stop Hurd in his tracks, but the company is also suing for damages and lawyer fees. It also so distrusts Mark Hurd that it is petitioning the court to appoint as so-called "master" who will monitor the man and his activities to ensure that he doesn't tell his new company any of HPs secrets.
Oracle, in the person of the CEO himself - and surely Ellison must have known that HP wouldn't take things lying down - has responded thus: “Oracle has long viewed HP as an important partner. 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.” And this is from the man who called the HP board "idiots" when they sacked Hurd a month ago. With a partner like that...
It's all very, very nasty and could lead who knows where? Some analysts in the US are already speculating that Oracle might even use the spat as a reason/cause/excuse to make an attempt to buy-out HP. If that were to happen no-one can envisage what the end result might be but there would be certain to be massive job losses, many more than corporate hatchetman Hurd imposed on HP when he took over. Renowned as a severe cost-cutter, while at HP Mr. Hurd laid about him with a scythe s cuttings jobs left, right and centre.
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