Cereva 1 -- Pirus 0

Pirus Networks has lost the first round in its courtroom battle with Cereva Networks Inc.

But this fight isn't over. Pirus now plans to move the case to trial. The struggle, over an alleged breach of contract, turns up the heat between the two companies before either has even brought a product to market.

It seems a little extreme of Pirus to take this case to trial when there are so many people out on the market now,” says Dan Tanner, analyst with the Aberdeen Group. “This guy must be good.”

On October 11, in the Middlesex Superior Court, Cambridge, Mass., a judge ruled in favor of Cereva in its breach of contract suit against Timothy Lieto, its former head of sales and business development, preventing him form working for Pirus (see Cereva Skids to a Halt).

By taking the job at Pirus, Cereva claims Lieto is breaking the one year no-compete clause in his contract. He still has nine months left on the contract before he can seek employment with a competitor. And this is where it gets complicated, as exactly who competes with whom in this fledgling market isn’t altogether clear yet.Nevertheless, the judge has enforced the non-compete agreement against Lieto. “He found that Pirus is a competitor of Cereva’s,” says Bruce MacDonald, director of corporate communications at Cereva.

Pirus firmly maintains this is wrong. “It still holds true that we do not compete with them, which is why we are taking this to trial,” says a company official. “It is a big blow to us, as Tim is perfect for our company.”

Why the continued fight over Lieto? Both Cereva and Pirus are almost out of product trials and are preparing for the next phase -- ramping up sales -- which is Lieto’s forte.

Former colleagues say his experience at hawking LAN and SAN switches is a perfect fit for Pirus as it builds its hybrid Fibre Channel/Ethernet switch. Prior to joining Cereva, Lieto was head of data networking sales at Lucent Technologies Inc. (NYSE: LU), a role he assumed when the telecom equipment giant acquired his then employer, gigabit-Ethernet switch maker Prominet.

— Jo Maitland, Senior Editor, Byte and Switch http://www.byteandswitch.com