The founder of a Washington-based custom application and services provider is considering taking action to challenge Microsoft over the naming of the next version of the Windows operating system.

John Wall, CEO of Vista, says his company is "considering all of its options" for a potential case against Microsoft because of the company's choice of the name "Windows Vista" for the version previously code-named Longhorn.

Wall says the naming of Windows may violate a trademark his company has, and potentially create confusion over the software and services Vista provides. Vista is headquartered just down the road from Microsoft and provides small businesses with online information systems, including custom applications, as well as consulting services.

"If people call it Windows Vista, that's not a problem," he says. "If people call it 'Vista’, that confuses it with our business and what we do."

Wall says Vista will be analysing traffic to its website to see what effect the Windows Vista name may have on visitors to the site. If the effect is significant – that is, if a surge of visitors comes to looking for information about Windows Vista – the company may decide to take legal action.

One of the key tests for whether a new trademark can be challenged is if it creates confusion over another company's products and services, says Bill Lozito of Strategic Name Development, a brand naming consultancy in Minneapolis.

Vista potentially has a good case against Microsoft because its software and services are similar to what the software giant offers, he says. Because Microsoft is a larger, more recognisable company, the name confusion might drive some of Vista's potential customers to Microsoft.

"The ramifications are [that customers] no longer associate you as this independent company and think you're a part of Microsoft," Lozito says. "If they need the service you're providing, they'll call Microsoft instead of you. You're going to get drowned out."

The issue for Vista is particularly prickly because the company deals mainly in the small-business market, a segment where Microsoft also figures prominently, he added.

Wall's company is not the only one that might have a case against Microsoft in the naming of the next version of Windows. At least two other software companies, both named Vista Software, might have a good argument against Microsoft, Lozito says.

"Anyone using that name that's doing business in this category runs the risk of being overshadowed by Microsoft Windows Vista," he says.

Microsoft plans to make the first beta of Windows Vista available on 3 August.

The Vista case is not the first time Microsoft has decided on a product name that conflicts with an existing trademark. In 1998, Microsoft paid internet service provider Synet $5m (about £2.8m) for the rights to the name Internet Explorer because the company had that name trademarked in 1995.