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APLICATIONS INC. v. HEWLETT-PACKARD CO.

October 20, 1980

APLICATIONS INC., Plaintiff,
v.
HEWLETT-PACKARD CO., Defendant



The opinion of the court was delivered by: CARTER

Defendant Hewlett-Packard Co. ("H-P") moves for summary judgment on the claims of plaintiff Aplications, Inc. ("Aplications") for fraudulent misrepresentation, negligent misrepresentation, and breach of warranties, express and implied, and on plaintiff's claim for consequential damages. Judgment is granted on the claim for breach of express and implied warranties, but otherwise denied.

FACTS

This matter from the bright new frontier of small-scale computers was previously before this court when plaintiff's motion for summary judgment on its claims was denied, *fn1" and the facts may be briefly recounted. H-P developed and marketed the computer language subsystem APL/3000 for use on its HP 3000 Series II computers. APL is prized as a computer language for its elegance and flexibility. (See e.g. May 24, 1979, Affidavit of Chester Sherer, Plaintiff's Memorandum in Opposition) However, the language also taxes the computer's resources: theretofore, attempts at adapting APL to small-scale computers had not proven acceptably responsive (id., p. 2), and its use had been confined to larger, more expensive systems. If APL/3000 in fact was able to provide acceptable performance on a less expensive computer, it would constitute an important innovation in the field.

 Plaintiff APLications adapts and resells computers, with software of its own design, to the ultimate user of the computer system. When APL/3000 was announced in the fall of 1976, APLications was in the early stages of negotiating the sale of a system to American Field Services ("AFS"). Responding to H-P's announcement and accompanying brochures Aplications contacted H-P about using APL/3000 in the proposed system for AFS. Representatives from Aplications and AFS met through January of 1977 to negotiate the deal, and representatives of H-P attended a number of these discussions.

 On February 1, 1977, Aplications and H-P entered into a written "OEM Purchase Agreement" ("Agreement") under which Aplications would be entitled to a discount on H-P equipment purchased for adaptation and resale. Aplications ordered a 3000/Series II computer in March, 1977, programmed in APL/3000, and other hardware, to be delivered directly to AFS. When the computer was installed and initially tested, however, it was determined that AFS's needs could not be met with the machine as programmed: response time in APL/3000 was unacceptably long. The computer has since been reprogrammed in another language and is now performing acceptably for AFS.

 Aplications contends that it relied on H-P's claims about APL/3000 performance in contracting with AFS, and in reorienting its business. In Aplications' eyes, H-P represented-to the industry in general, and to Aplications and AFS in particular-that APL/3000 would provide "fast response even with multiple users" (H-P Brochure, "Total Solution APL," Affidavit of Jean Denver, Ex. A, Defendant's Affidavits in Support of Motion), as was required by AFS. Aplications claims to have lost profits on its contract to AFS, as well as on other possible adaptation and resale contracts, and to have suffered damage to its business reputation, which supposedly resulted from its reliance on H-P's representations.

 H-P, for its part, insists that its statements about APL/3000 were generalized statements or "puffing," and were not to be relied on. Further, H-P points to the terms of the Agreement, as precluding any warranties that might have been breached, as well as reliance by Aplications on other statements.

 That Agreement contains the following warranty section:

 
5. WARRANTY
 
HP products are warranted against defects in materials and workmanship. This warranty applies for ninety (90) days following delivery. For products installed by HP this warranty period shall commence upon installation or the 31st day following shipment whichever occurs first. During the warranty period, HP will at its option, repair or replace products which prove to be defective.
 
Necessary travel will be provided at no charge to locations served regularly by transportation within countries where HP has Computer Systems service facilities. However, the following products must be returned to HP at Buyer's expense for warranty repair or replacement: 3070A, 3071A, 2103K, 2649A, and their associated accessories.
 
NO OTHER WARRANTY IS EXPRESSED OR IMPLIED. HP SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. HP IS NOT LIABLE FOR CONSEQUENTIAL DAMAGES.

 Among the other terms and conditions of the ...


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