This week, in a criminal case against the founders of Nginx, which outraged representatives of the Russian IT industry, a point was put - it was closed. But it turned out that the proceedings will continue in the United States - in a court in California, the Cypriot company Lynwood, which is associated with co-owner Rambler Alexander Mamut, will try to recover $ 750 million from the founders, investors and buyer Nginx, and at the same time challenge the registration of the Nginx trademark. But it will be as difficult for her to prove her case in the USA as in Russia, The Bell found out.
The Second Nginx Case
Even if you are not a fan of legal documents, you should still read the Lynwood 140-page lawsuit against the founders, investors, and Nginx buyer. Lawyers hired by Alexander Mamut’s company presented the case as a real thriller with action-packed details like deleting secret correspondence and destroying servers.
“Defendants Igor Sysoev and Maxim Konovalov and accomplices brazenly stole Nginx from their employer Rambler,” says Lynwood. Under the guise of high-class programmers, dishonest businessmen were hiding, who sought to cash in on the opportunities provided by Rambler - so briefly we can retell the plot of the lawsuit.
What did we learn from the lawsuit
Rambler learned about the registration of Nginx only in 2019 from his witness - the former top manager of Rambler Alexander Korotkov, the lawsuit states. Lynwood considers this a direct violation of the rights of the company: “Naturally, Rambler could invest and develop Nginx Enterprise if only accomplices were informed about its existence,” the lawsuit said. But the founders of the service instead turned to external investors - precisely in order to steal the product.
In 2010, Korotkov and Konovalov conducted correspondence with Sysoev, which the founders of Nginx allegedly subsequently tried to destroy. In it, they discussed the development plans of Nginx as a commercial service and made a presentation for investors. The first real use of the Nginx trademark occurred no later than March 1, 2011, when the founders were still working at Rambler, the lawsuit said.
The founders deliberately hid the true value of Nginx from Rambler, the plaintiff claims. The lawsuit cites an episode when Konovalov, when evaluating the prospects of the service for Rambler, gave him the lowest score - one, although at the same moment he allegedly already discussed the sale of the service for $ 100 million with Sysoev
Lynwood insists that Nginx was designed to solve the problems of Rambler, and Sysoev himself acknowledged this. For his work, he received high salaries and bonuses (which are not specified). But the allegation that the leadership of Rambler instructed Sysoev to develop Nginx products is not in the lawsuit.
The plaintiffs claim that the co-defendants - Runa Capital and E.Ventures invested in Nginx - knew that the rights to Nginx products belonged to Rambler, but pushed Konovalov and Sysoyev to spin off.
The American F5 Networks, which bought Nginx in 2019 for $ 670 million, also allegedly knew about the rights of Rambler. According to the plaintiff, this is indicated by the fact that during due diligence F5 acknowledged that the first commercial use of the brand was preceded by the departure of the co-founders from Rambler.
One of the intermediaries who allegedly helped the founders of Nginx “steal” the business was Alexander Korotkov - in 2007-2009 CTO Rambler, the lawsuit claims. Most of the episodes that relate to the last years of the work of the Nginx founders on Rambler are taken precisely from his testimony: in 2019, after the sale of the American F5 service, he provided Rambler with a copy of the correspondence with the founders from 2010, which they tried to destroy, the claim claims. He also said that, after their dismissal, the partners of Sysoyev and Konovalov destroyed the Rambler servers, which stored information about the service.
Korotkov was also the “accomplice” of Sysoyev and Konovalov, the claim is alleged: it was he who helped the founders who were still working at Rambler to contact the venture community and find investors “to finance a new company of accomplices”. Through it, it was planned to legalize the paid Nginx Enterprise product, based, according to Lynwood, on stolen intellectual property.
In addition, it was Korotkov, who moved to Silicon Valley, who registered the Nginxplus.com domain and trademark in the USA in his name, the lawsuit states. Two days after the application, Lynwood filed a complaint with the US Patent and Trademark Office regarding the registration of the Nginx App Protect trademark. The application itself was submitted by F5 at the end of 2019 (a service based on the paid version of the Nginx Plus web server that protects sites and applications from hacker attacks, data leaks and other external threats runs under this brand).
The appearance in a lawsuit of the testimony of a former associate of the founders of Nginx may seem strange. But, according to The Bell, Denis Kalinin, who headed Rambler in 2004-2007, Korotkov showed interest in the fate of Nginx for a long time: “He called me about two years ago and told me that they were gathering people to file a class action lawsuit against Nginx and Sysoev, because that he, while working at Rambler, stole a product from the company. I answered him - they didn’t steal anything, everyone was in the know. ” But Korotkov, Kalinin claims, answered that Nginx is preparing a billion-dollar deal and that there is a chance to make money on it.
Kalinin says that he called Korotkov’s proposal nonsense and did not contact him anymore, but just in case he contacted the founders of Nginx. They assured that all possible risks have long been studied by lawyers (at that time the company already had investors who carried out its due diligence) and there can be no complaints. Korotkov did not answer calls and messages of The Bell correspondent in social networks, since the filing of the Lynwood lawsuit, he has not publicly commented on this.
Prospects in court
The fact that Rambler until 2019 did not know about the existence of the world's leading web server service, which is used by 450 million sites (as stated in the Lynwood statement), is hard to believe. “If Rambler really didn’t know what Nginx is, then, probably, idiots worked there after me,” Kalinin says. - The whole world knew, but Rambler did not? This product is known to everyone, everyone has worked on it, starting with Netflix and Yahoo. ”
At Rambler, everyone knows that there is such a service and that it is free software, in the middle of the zero, everyone said. As for investors, they invested in a company that was engaged in a product created on the basis of what Sysoyev, working at Rambler, posted for free access: "Investors bought a company that developed paid software based on open source."
De jure, the main question so far is whether the American court will even accept Lynwood's statement, lawyers say. “Filing a lawsuit does not mean that the trial will automatically take place - to begin with, the US court must recognize the jurisdiction to consider this case,” explains Forward Legal attorney Lyudmila Lukyanova. “The whole center of gravity of all the circumstances of this case is in Russia. I fully admit that the defendants will file a motion to refuse to consider the case, because the United States has an extremely mediated relationship with the events described in the lawsuit, ”agrees Yevgeny Krasnov, head of international disputes practice at Buzko Legal.
The main question that could have arisen in this case in a Russian court was whether Sysoev had a task from the company to develop Nginx and whether such work was spelled out in his job description, intellectual property lawyers explained to The Bell at the beginning of the Nginx case. In an American court, the question will be the same, Krasnov said. “The question is whether the plaintiffs can prove whether the development of such a service was part of Sysoev’s job description or if he had any other written agreements with the company. According to the American copyright law, there must be a written agreement between the employee and the employer stating that all works created at work belong to the employer, ”the lawyer says.
“In the lawsuit filed in the US court, Lynwood does not focus on the specific labor duties of the creators of Nginx, but accuses them of stealing the result of intellectual activity and conspiracy,” says Lukyanova. “But if Lynwood proves that when creating Nginx, the defendants really used Rambler’s intellectual property and deliberately hid the appearance of the product, there are chances to win,” she said. “The courts of the United States and England look deeper into the category of conspiracy than the Russian.” The fact that the founders of Nginx discussed the commercial prospects of the service while working at Rambler, negotiated with investors and hid the value of the service from their colleagues is indirect evidence for the court, Krasnov does not agree: “Without evidence, that by job descriptions and agreements with the company, everything the rights to the product should have passed to the employer, this argument will not work. ” But the plaintiff can expect that the lawsuit will create reputational risks for the Nginx buyer, and F5 will eventually agree to compensation “just so as not to get involved in all this,” he argues.