HP and Oracle: Please don’t stop fighting by Adam Lashinsky @FortuneMagazine October 27, 2010, 6:34 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons The latest act between the feuding companies is just as baffling as the preceding ones. What exactly does Larry Ellison have up his sleeve? “Larry Ellison does everything he does for a reason.” Leo Apotheker starts his new job at HP on Monday. That’s what someone who knows Ellison but didn’t know his intentions said to me the day the Oracle CEO wrote an inflammatory email to the New York Times, mocking the board of Hewlett-Packard for ousting Mark Hurd as CEO. Was Ellison just enraged at the treatment of his tennis buddy and fellow CEO? Perhaps. Yet the observation about Ellison was prescient. Almost exactly a month later, he hired Hurd as co-president of Oracle, a coup for his company’s historically aggressive sales organization and a black eye for HP. What then is behind Ellison’s latest broadside, his statement late Tuesday night daring HP HPQ to make available its incoming CEO, former SAP sap CEO Leo Apotheker, as a witness in an upcoming trial in federal court in Oakland between Oracle orcl and SAP? Here is Ellison’s statement in full, weird proper nounage, typos and all: “A few weeks ago I accused HP’s new CEO, Leo Apotheker, of overseeing an industrial espionage scheme centering on the repeated theft of massive amounts Oracle’s software. A major portion of this theft occurred while Mr. Apotheker was CEO of SAP. HP’s Chairman, Ray Lane, immediately came to Mr. Apotheker defense by writing a letter stating, ‘Oracle has been litigating this case for years and has never offered any evidence that Mr. Apotheker was involved.’ Well, that’s what we are planning to do during the trial that starts next Monday. “Unless, Mr. Lane and the rest of the HP Board of Directors decide to keep their new CEO far, far away from HP Headquarters until that trial is over. If HP keeps Leo Apotheker far from HP headquarters we cannot subpoena him to testify at that trial. “I don’t think Ray Lane wants to risk Leo Apotheker testifying under oath as to why he allowed the theft of Oracle’s property to continue for 8 months after he was made sole CEO of SAP. I hope I’m wrong, but my guess is that new HP’s Chairman, Mr. Lane, will keep HP’s new CEO, Mr. Apotheker, far, far away from the Courthouse until this trial is over.” Ellison’s statement is so rich with subtext that it bears deconstructing. First, the accusation he made appeared in a Financial Times article on October 3. The business over whether Apotheker was involved with TomorrowNow is where things turn weird. HP has been insisting that Apotheker was shocked about what was going on at TomorrowNow, which didn’t occur on his watch. Here is HP’s statement last night: “Oracle had ample opportunity to question Leo during his sworn deposition in October 2008 and chose not to include him as a trial witness until he was named CEO of HP. Given Leo’s limited knowledge of and role in the matter, Oracle’s last-minute effort to require him to appear live at trial is no more than an effort to harass him and interfere with his duties and responsibilities as HP’s CEO.” As I’ll show, HP is glossing over some important facts here. But before getting to that, let’s note that Ellison himself is wobbly on the facts too. Apotheker became sole CEO of SAP on June 1, 2009. TomorrowNow shut down in 2008. Having said that, this fact isn’t particularly relevant. Consider how HP, in its announcement that Apotheker was becoming its new CEO, described his role at his previous company: “As a member of SAP’s Executive Board from 2002 until 2010, Apotheker oversaw the full sweep of the company’s operations.” A trove of public documents Oracle undoubtedly will show at its trial link Apotheker to TomorrowNow and its Safe Passage program, which enabled clients to shift from Oracle to SAP. TomorrowNow is at the heart of the dispute. It was a subsidiary SAP acquired that ran a program that Oracle has shown illegally used Oracle’s intellectual property. The trial, which begins November 1, is to determine damages. (SAP contends the damages are in the tens of millions of dollars; Oracle wants a couple billion.) If the suit goes to trial, Oracle has plenty of people it can call, including its own former and current employees, as well as SAP’s former and current employees. Why insist on calling Apotheker? Well, that’s easy. It will embarrass HP, which feels Oracle, Ellison specifically, is harassing it. It goes a little deeper than that, though. Oracle and HP also are engaged in a bizarre shouting match over how much Apotheker bears responsibility for what happened with TomorrowNow. In a March 2006, press release, for example, SAP bragged at how well TomorrowNow was working in terms of flipping Oracle customers to SAP. Apotheker is the sole SAP executive quoted in that statement. (This is common in the enterprise software industry; a common feature of Oracle’s earnings calls with investors is the identification by name of customers it has snatched from the competition.) The spat goes deeper still of course, to all the nastiness over HP’s ousting of Hurd, Ellison’s defense of him, Oracle’s hiring Hurd, HP suing Hurd and Oracle, Ellisons public broadsides against HP over that episode, and the ultimate settlement of that suit. Back to Ellison’s statement, though, the tweaking of Ray Lane is more subtext. Lane was the highly successful president of Oracle in the 1990s, before Ellison showed him the door. Since then, Lane has been a partner at Kleiner Perkins and largely out of the enterprise software world. Oracle wasn’t pleased to see him emerge as the non-executive chairman of HP following the departure of chairman and CEO Hurd. (HP split the CEO and chairman role, as Oracle has done for years.) This business of whether or not Apotheker will be available to be a witness at the trial is also surreal. I have been told that Apotheker has been in Palo Alto for a while now. He shouldn’t be difficult to find and call as a witness. Yet even the definition of a witness is a bone of contention between these two frenemies. HP has argued twice now that Oracle never intended to call Apotheker as a witness until after he was named CEO of HP on September 30. That his name appears on an August 5 witness list filed with the court and again on September 23 doesn’t seem to mollify HP, which, it seems, is drawing a distinction between a list of potential witnesses and who Oracle really intended to call. This sounds like a game of ‘Sticks and stones will break my bones.’ If this suit goes to trial, and that’s still a big if three days away from jury selection, the questioning of witnesses will be a lot rougher than this war of words in the form of dueling press releases. (Litigators are even nastier than journalists and publicists. Trust me.) So what does Ellison have up his sleeve? Did SAP offer a low-ball settlement and his Apotheker-baiting statement Tuesday night was Oracle’s response? Does Ellison really want to crater a partnership that’s rather important to Oracle and HP in terms of competing against IBM ibm ? (I hear that Oracle co-president Safra Catz has been cast in the unfamiliar role of good cop, assuring HP that the HP-Oracle relationship in the real world is business as usual.) Or is the billionaire on a winning streak (the America’s Cup, beating HP, hiring Hurd, etc.) just enjoying a good fight?