It was the spring of 1996 and we were getting ready to announce our first game (Disruptor) at E3. At the time, we were doing business as Xtreme Software. But, right before we began working on the press release for the game, we found out that an Arizona database company was also called Xtreme. I don't know how they found us, but I remember getting a letter from a lawyer explaining that we couldn't use their name. Suddenly we had a few days to find a new moniker.
We put up a white board and started writing down every name we could think of. We had about 100 that seemed viable. Some of the more popular ones were Ragnarok, Black Sun, Monument, Planet X and Firestorm. My personal favorite was one that [Chief Creative Officer] Brian Hastings had suggested - Ice-9. We liked it so much that we got permission from Kurt Vonnegut to use it. Ironically, it turned out that someone who HADN'T gotten permission from Kurt was already using it. And similarly all of our other favorites were in use.
With about 24 hours to go Insomniac Games popped up. It made sense given we weren't sleeping much anyway. And incredibly, no one else was using it. Since then our logo has changed a couple of times. But fortunately the name has stuck.