Hewlett-Packard Sues Former CEO Mark Hurd

Updated: Hewlett-Packard (s hpq) is suing its former chairman and CEO, Mark Hurd, alleging breach of contract and potential misappropriation of trade secrets. Hurd left the company under a cloud last month, after allegations that he was involved in a number of improprieties related to a human resources marketing consultant the company hired. Under an agreement with HP, Hurd left the company — taking with him a $40-million severance package — but the former HP executive was quickly snapped up by Oracle (s orcl), which today announced that he will become co-president of the database company. Oracle founder and CEO Larry Ellison is a friend of Hurd’s, and was a prominent supporter of the former HP CEO after the news broke about his departure.

In the statement of claim filed today, HP says that:

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 Corp., 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.

The claim quotes an independent analyst — referred to in a Computerworld column about Hurd’s appointment at HP — as saying that the former HP executive will know “which Sun accounts were being most heavily mined and which HP accounts are the most vulnerable in the large enterprise space” and that this information “could be very valuable” to the company’s competitor. Hewlett-Packard also mentions that Hurd was responsible for preparing the company’s strategic business plans, including a “highly confidential” analysis of Oracle’s competitiveness with respect to HP.

In a separate statement on the lawsuit, HP said that “Mark Hurd agreed to and signed agreements designed to protect HP’s trade secrets and confidential information [and] HP intends to enforce those agreements.” The claim itself demands that a court provide “immediate injunctive relief to protect its trade secrets and confidential information from Hurd’s threatened misappropriation.” Oracle has become even more of a competitor for HP since the database company acquired Sun Microsystems, which sells servers and related software to corporate customers, a market that Hewlett-Packard is also focused on.

According to a report in the Wall Street Journal, the severance package that Hurd received from HP included a confidentiality agreement that prevents him from disclosing sensitive information about the company or its business for two years. Although traditional non-compete clauses are unenforceable in California, the state does allow for lawsuits based on the disclosure of trade secrets (PDF), which appears to be the key to HP’s claim. We’ve asked Oracle for a comment on the lawsuit, and will update this post if and when the company or Mr. Hurd responds. Update: Oracle has responded with a statement from CEO Larry Ellison that says:

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.

The full statement of claim from HP is embedded below:


Post and thumbnail photos courtesy of Flickr user bloomsberries