Last week in Moscow an unexpected criminal case tarnished one of Russia’s best tech success stories – that of Nginx, the world’s most popular web server, which was sold to a US industry giant 15 years after being created by an obscure Russian system administrator.
On Thursday, December 12, law enforcement raided the company’s Moscow office. Armed police officers also came to the homes of Nginx co-founders Igor Sysoev and Maxim Konovalov, seizing computers and interrogating the suspects during several hours.
The police intervention followed a lawsuit filed by Lynwood Investments, a company connected to Russian billionaire and Rambler Group co-owner Alexander Mamut.
Rambler claims ownership over the Nginx web server code, which Sysoev began developing while working in this company in 2004.
“We found that Rambler Internet Holding’s exclusive right to the Nginx web server has been violated by the actions of third parties,” Forbes Russia quoted a Rambler spokesperson as saying on Thursday.
The spokesperson specified that Rambler ceded to Lynwood the right to bring claims related to such violations.
According to a copy of the criminal case cited by Forbes, Rambler’s losses from the alleged copyright infringement have been estimated at 51.4 million rubles ($820,000 at the current exchange rate).
IP claim or racket?
Konovalov called the litigation “a typical racket, simple as that.”
“It’s hilarious that the company Nginx was officially registered in 2011, and it’s now 2019, and in all this time Rambler never raised any issues (…) It’s all perfectly clear: there was the deal with F5 [the US company which acquired Nginx in March 2019 for $670 million], the big money became palpable, and then we see the desire to grab a piece of it for themselves,” Konovalov told Meduza.
A few days later, 50 former Rambler programmers and managers published an open letter in support of Sysoev and Konovalov. Calling Rambler’s lawsuit “a monstrous violation of professional ethics and authorship rights,” they testified that Sysoev worked over the web server at that time off working hours and with no connection to employer assignments.
A number of industry leaders also came in support of Nginx – at least in that such IP claims should be examined in the framework of civil law rather than through a criminal case.
Even Sberbank, which owns 46.5% of Rambler, criticized Rambler. The bank called an extraordinary meeting of the company’s board of directors on Monday.
“We will do our utmost to ensure that this situation is resolved through negotiations, with the involvements of all parties,” Rambler board chairman and Sberbank first deputy chief executive Lev Khasis said in a statement quoted by Reuters.
A global success
The Nginx web server software is currently used by more than 437 million websites across the world, including nearly 42% of the highest‑traffic sites. “Whether you know it or not, you use Nginx every day of your life when you post a photo, watch streaming video, purchase goods online, or log into your applications at work,” the company justly claims.
Nginx was formally incorporated as a company in August 2011. The startup, founded in Moscow, moved its headquarters to San Francisco.
Nginx raised a Series A round in 2011, receiving $3 million from e.ventures, Moscow-based Runa Capital, and US fund MDS Capital.
The company then secured several additional rounds of funding, which involved US-Russian PE firm Russia Partners (2014) as well as Goldman Sachs Growth Equity ($43 million capital injection in 2018). Nginx was ultimately acquired by F5, a global leader in multi-cloud application service, in March this year.
