Data Central

[#1]

In response to the news of Mark Hurd’s intention to join Oracle, HP today filed a civil complaint in the California Superior Court (County of Santa Clara) against Hurd. HP’s statement on the matter:

“Mark Hurd agreed to and signed agreements designed to protect HP's trade secrets and confidential information.  HP intends to enforce those agreements.”

The full complaint can be found here [pdf]; part of the introduction is excerpted below:

“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.”

Parts of the Agreement Regarding Confidential Information and Proprietary Developments (the “Trade Secret Protection Agreements”), signed by Hurd on February 6, 2008, February 26, 2009, and February 12, 2010, can be found in the complaint (sections 28-32).

[#2]

WELL DONE HP. DONT'T LET HIM OF LIKE THIS

[#3]

I'm pretty sure that Oracle were already prepared for this. It will be interesting to see what will happen next. I think HP lost a lot:

- A CEO that tripled its revenue

- The millions they paid for Hurd

- Consistent stock growth

The only think that HP gained is a stronger competition.

Clearly, HP paid a lot for its decision to preserve the integrity of its executive group. Me, as well as many other investors, do not think that it was a wise decision to let Hurd go...

[#4]

He should have not agreed to join a rival company... PERIOD.

[#5]

Its unAmerican to keep a person from working in their field.    He didn't sign a non compete clause, so he isn"t allowed to get a job?  HP can possibly get their money back they paid him in this suit, but HP can't keep him from working without a non compete clause. 

[#6]

I think that HP's board needs to think long and hard about how much of the shareholders' money they intend to waste losing this case.  On top of that, do you really want the world's #1 database vendor to be actively steering customers away from HP hardware?  Not to mention, how do you expect your executive recruitment to proceed, when any candidate you approach knows he can expect HP to sue to keep him unemployed if things go south?

You'd better kiss and make up with Oracle as fast as you can, or this is going to cost HP far more than you expect.

[#7]

I thought non-compete agreements were unenforcable in the stat of California.  Anyone know?

[#8]

HP should not have fired Hurd in a haste and esp without a non-compete clause in the separation.They could have done it with due caution and due diligence.  Scandals have not sinked any ship - be it a firm or a nation. It maybe unethcial for Hurd to do what he is able to do in his new job. It is not illegal and moreover hard to prove that it is illegal. HP has done this in the recent past by hiring Donatelli from EMC. While it seems on paper that Donatelli did not work for Storageworks, but it could be really hard to believe for an outide that he had no role in IBRIX acquiition or other stuff around storage. 

With Hurd's new job, HP acted in haste - once again-  by filing the lawsuit. If they loose, they will loose big time with a partner and with an executive who knows their knobs. They should have approached the Oracle board and discussed their issues with this hiring and the impact on partnership in a direct and public way - the way Ellison responded to HP lawsuit. Even if HP wins it, Hurd can always act as a tennis companion without a formal employment or paperwork.

HP is a great company and it needs to just needs to focus on invention and execution and not get distracted by Hurd.

Finally, lawsuits only make the lawyers richer and happy.

[#9]

Pft.

The first cause of action requires they prove harm done. The press release by Oracle is more than enough to satisfy notification. The second part requires that HP prove he disclosed HP trade secrets. The problem with section B is the word "utilize" trade secret information. It is nowhere in the original confidentiality agreement. And again, they must prove disclosure. Hurd can run the company without saying one word about HP.

The second cause of misappropriation is pure conjecture and based on the idea of his willing disclosure of proprietary information. Again, HP must prove wrong doing in which case, it is far to soon to do so.

HP's request for compensation is nothing but punitive and petty. They are entitled to nothing since they weren't denied profits from the time of his departure and hiring at Oracle. Again, where is the proof of harm.

Even if this goes to trial, a judge should deny the injunction on the basis of merit. Essentially, Mark Hurd knew this agreement was nothing to stand in his way. And my money in on Oracle, Ellis and Hurd to vigorously defend and defeat this lousy litigation.

[#10]

this whole Hurd thing get fishier by the day.

smoke screen around the real reason he was fired, assumingly due to behavior non complying with the HP standards and yet he gets a very rich "handshake".

Now this law/civil suit.

Me I am just happy that he was booted and yes I am an investor also, but money cannot be all in this world.

[#11]

So let me get this straight - I let someone know our trade secrets (which they need to know to do their job), do not require a non-compete of any kind, terminate them and they cannot go to work for any of my competitors?  Sweet!

How many Silicon Valley firms do you really think will back setting that precedent for their industry?

It appears - again - that HP has performed their "ready, fire, aim" scenario that they pull out  every few years.

All cynicism aside, if HP was intent on releasing Hurd it would have served them well to have done a better job of negotiating his severance prior to cutting him loose.  California is not a big supporter of non-compete agreements anyway, and if there is not one in place it could be an ugly fight.

And never to bet against Larry Ellison in that situation.

[#12]

@ Ron, There is a non-compete clause. It is in the document--page 8 under section 7(a). Protective Covenants - No Conflicting Business Activities. As far as I can tell, the clause is in effect for 12 months following his leaving the company. It also says he was supposed to let HP know who his new employer would be. From the articles I have read, HP found out when Oracle announced it. I'm not sure we have all the facts, but it looks pretty tight.

I have no problem with him working in the same field, heavan knows that I wouldn't want to have to start over. I have signed a few of these myself, but luckily, have not been in conflict when I have started a new contract.

---

From PDF Doc:
(a) No Conflicting Business Activities. I will not provice services to a Competitor in any role or position (as an employee, consultant, or otherwise) that would involve Conflicting Business Activities in the Restricted Geographic Area...

[#13]

Ron,

HP is hardly "keeping him from working". You're not talking about a rank-and-file middleman who has to compete with thousands of peers, with similar credentials, for a handful of low-level jobs. You're talking about someone who could walk into a C-level position at just about any company crazy enough, and with deep enough pockets, to hire him. Non-competes affect the little guys, not the top brass.

As for the suit, HP needs to take a long hard look in the mirror. The company chose to do something much more underhanded not long ago when it hired Donatelli out from under EMC.  Suddenly it has morals and ethics. 

At least Hurd was let go before he chose to join the competition. Oracle didn't woo him out from under HP while still under contract.

Boo hoo. What goes around comes around.

[#14]

An employment lawyer's view:

http://www.wordonemploymentlaw.com/2010/09/hp-to-mark-hurd-youre-fired-and-youre-sued/

[#15]

this whole Hurd thing get fishier by the day.