Compaq files lawsuit against 'Server Mafia'

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

Compaq filed the civil suit Feb. 21 against RLX Technologies, 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, director of software marketing and business development for Compaq's industry standard server group. "That is wrong.

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"There are times that, for various reasons, people chose to go to work somewhere else. Becker said. "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 start-up, according to Bohren.

RLX hopes to ship its server, which is code-named "Razor," during the first half of the year. They will include the Transmeta Crusoe microprocessor and support operating systems such as Linux and Microsoft'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 that 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 companies, and this is nothing that Compaq or Dell 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.

Compaq, in Houston, is at http://www.compaq.com/. RLX Technologies, in The Woodlands, Texas, is at http://www.rlxtechnologies.com/.

The IDG News Service is a Network World affiliate.