IBM may face lawsuit over server name

Big Blue is threatened with a potential lawsuit over its eServer brand of servers unveiled just two days ago in a dispute over an e.

Stephen Shankland
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IBM faces a potential lawsuit over its eServer brand of servers, unveiled Tuesday, in a dispute over an e.

Cary, N.C.-based Technauts has been selling server appliances under an arguably identical name since early 1999 and has established brand identity for its eServer line. It also claims to hold a trademark on the name "eServer."

"We take this very seriously and will do whatever it takes" to protect the name, said Craig Pyne, vice president of sales and marketing for Technauts.

That Technauts will be able to convince IBM it should stop using eServer is unlikely, said Gartner analyst Tom Bittman."IBM already has put a lot of money into it," he said. "They're not going to give it up easily."

For its part, IBM doesn't see any real conflict with Technauts. The e in IBM's eServer is contained inside a circle. Visually, therefore, it looks different, although the two brands might be pronounced the same.

"There's an easy explanation for it," said IBM spokesman Rod Thorn. "The IBM eServer brand consists of the established e-business logo--that's the script e with the circle around it--and then the descriptive term 'server' after it."

IBM has been using the logo for about three years, Thorn said. "We own the circle-e logo, and it's a pretty well-known trademark."

For Technauts, however, that explanation may not be adequate.

"There is typically a process for these kinds of things," Pyne said. "The first step is to let IBM know that we do object to it, and we're doing that through our attorneys by the end of the week."

Thorn would not comment on legal issues, particularly since IBM had not yet been contacted by Technauts' attorneys.

The stakes are high for Technauts, Pyne said, because IBM's use of eServer jeopardizes its business. But IBM also has much to lose, with a $75 million commitment to promote its eServer this quarter and $225 million next year.

"Believe me, there's a lot more money than that involved here," Bittman said. "There's marketing, there's massive amounts of material here--not only with IBM but all its (business) partners. So easily we're talking billions of dollars."

Technauts, founded in March 1997, is a relatively small maker of "server appliances," special-purpose computers geared for network tasks. Technauts' eServer software is a framework that lets a server be configured for Web serving, email hosting, file sharing or a variety of other jobs.

Technauts introduced the eServer products in early 1999, the company said. It sells the eServer software by itself as well as installed on computers.

Technauts has a variety of partnerships with larger computing companies. Hitachi sells Technauts' eServer products in Japan. Sun Microsystems is working with Technauts to develop server appliances to make it easier for schools to manage Sun hardware. And Intel offers Technauts software along with Intel hardware for manufacturers who want to assemble their own server appliances.

Pyne said Technauts' larger concern is customer confusion, but more seriously the loss of customers like Sun.

"I can guarantee that Sun doesn't want to have a name that IBM uses on its servers," he quipped.

Pyne said that not only is eServer Technauts' major product, "but we rebranded our entire company around eServer," including the logo. "The company name is actually a sub-brand of our product name because we felt, and our partners felt, that eServer had such a strong brand identity."

Even the company's phone number spells out eServer.

Technauts has registered a trademark in the United State and other countries, Pyne said.

But according to information on the U.S. Patent and Trademark Web site, Technauts' trademark request was denied.

The company applied for a trademark Nov. 4, 1998, and was assigned the serial number 75581859. The patent office issued a denial on March 14 of this year.

The company describes the application process as "ongoing."

Whether Technauts and IBM can resolve their differences or even if a legitimate conflict exists remains to be seen. But Pyne finds it hard to believe IBM didn't know about the company's use of eServer.

"We know they're aware of us, because we've had many discussions with IBM in the past, and our CEO, Larry Deaton, was 21 years at IBM," he said.

Technauts is also located a few miles down the road from IBM's Raleigh, N.C., campus, where Big Blue employs about 17,000 people.

Still, IBM may have a legitimate argument over its use of the circle-e logo to denote eServer.

"There might be some loophole there," Bittman said. "Still, if it's going to be a legal battle, I think IBM would pay off if necessary."