Compaq Computer Corp. has alleged that former employees of its server division are using the computer giant's intellectual property and
trade secrets to launch their own company.

Houston-based Compaq filed the civil suit Feb. 21 against RLX Technologies
Inc., which is headed by Gary Stimac, a founder of Compaq who served as senior
vice president and general manager of its systems division until 1996

"We do believe they are targeting our server people to jump start their
server program," said
--Rick Becker, Compaq
We do believe they are targeting our server people to jump start their server program.

, director of software marketing and business
development for Compaq's industry standard server group. "That is wrong."
He added, "There are times that, for various reasons, people chose to go
to work somewhere else. When people do move on to somewhere else ... we have
a responsibility (to ensure) that they do not take along our intellectual property
and trade secrets."

Kevin Bohren, RLX's vice president of business development and corporate communications,
said there is no truth to Compaq's allegations.

"We believe the charges against the company are completely false and unfounded,"
said Bohren, a former vice president of Compaq's commercial desktop PC division.

RLX, which prior to its public launch in January was known as Rocket Logix,
has been in development for approximately a year, Bohren said. The company has
received $59 million in venture funding to assist with its server development.
Approximately eight of the company's 80 employees came directly from Compaq.
Seven of them came over of their own accord and the one who didn't is a long-time
friend of Stimac who was encouraged to join the startup, according to Bohren.

RLX hopes to ship its server, which is codenamed Razor, during the first half
of the year. They will include the Transmeta Corp. Crusoe microprocessor and
support operating systems such as Linux and Microsoft Corp.'s Windows 2000.

Compaq believes RLX is engaging in "predatory targeting" of employees
and its server business, based on information obtained from RLX's Web site and
the behavior it has exhibited, Becker said. Compaq's lawsuit was filed in the
District Court of Harris County, Texas, 129th District.

Compaq alleges in court filings that Stimac is the leader of the "original
Compaq Server Mafia" -- a group of one-time Compaq employees who "know
everything there is to know about designing and selling servers," having
put Compaq in the server business in the early 1990s. The "original Compaq
Server Mafia" name actually originates from a headline of a story about
RLX which appeared in the January issue of Client Server News.

In court documents, Compaq states that RLX tried to enter an alliance with
Compaq in late 2000. Some progress was made but the talks stalled when Stimac
entered the picture, Compaq alleges. Discussions broke down when Compaq would
not accept Stimac's request that RLX could hire 50 Compaq employees for the
80 it needed for its company, and that Compaq make a large equity investment
in RLX, Compaq alleges. Ultimately, talks broke off completely in January.

Now, Compaq believes that RLX will make use of some of the company's trade
secrets for its own benefit. In an affidavit filed with the court, Brad Anderson,
Compaq's vice president of mainstream servers, raises concern that three RLX
employees who formerly worked at Compaq may be using trade secrets to develop
a low-density server, code named "ICE."

The three included Mike Perez, who succeeded Stimac as vice president of Compaq's
server group, Keith McAuliffe, who most recently served as Compaq's vice president
and general manager of the service provider and dot-com unit, and Mike Clark,
who was a vice president and segment manager for high availability products
at Compaq.

"Certainly, it was apparent to me that RLX was likely to exploit the confidential
and proprietary information and trade secrets of Compaq that RLX acquired by
its hiring of key Compaq personnel," Anderson said in the affidavit.

Compaq is not trying to put RLX out of business with its court action, however,
Becker said.

"We are absolutely not trying to target Rocket Logix," Becker said.
"We are really just trying to garner assurance between our two companies
that they are not in a position to divulge trade secrets and intellectual property."

A restraining order has been issued to RLX, stating that former employees of
Compaq can not divulge intellectual property or trade secrets, both companies
confirmed. Bohren at RLX said that is standard protocol at his new company already.

"We just don't do it," he said. "We are confident we have not."

It's not uncommon for technology companies to hire specialists away from other
company's, and this is nothing that Compaq or Dell Computer Corp. has not done
itself in the past, Bohren suggested. Bohren professed disappointment at the
lawsuit, saying some of the RLX employees spent many good years at Compaq and
remain shareholders of the company.

Compaq and RLX are due back in the Harris County court on March 5 for further
proceedings.

» posted by ITworld staff

IDG News Service

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