KL-2018: still growing, no matter what.

Hi folks!

The time has come to share our financial results for 2018. It can’t be denied that it was a tough year for us: the aftershock from the geopolitical turbulence that affected us which peaked in 2017 for sure caught up with us. But this is where it gets interesting…

You could be forgiven for thinking that everything’s reeeaaal bad for us and we’ve nothing at all to feel good about regarding 2018. But you’d be wrong. Because users still ‘voted’ for us with their dollars, euros and the rest: our business… continued to grow! The company’s global IFRS revenue for 2018 was 726 million dollars, 4% higher than in 2017*.

You could also be forgiven for thinking that, what with the unfair, coordinated informational campaign waged against us, we might have eased off a bit, gotten back into the trenches as it were, lain low for a while. You’d be wrong again! Just the opposite: we’ve continued to develop new products, new technologies, and new services of a kind our competitors can only dream!

So what did the best? Well, just like in the previous year we saw the highest growth in business based on promising new solutions and technologies that provide protection against the most complex of cyberthreats – the so-called ‘non-endpoint’ segment (+55%). Corporate segment sales also were up – by an impressive 16%; while online sales grew 4%.

Geographically, the greatest growth in sales (27%) was to be found in the META region (Middle East, Turkey, and Africa). Then (by some freak coincidence), the three regions of (i) Russia, Central Asia and the CIS**; (ii) APAC (Asia-Pacific); and (iii), Europe – achieved 6% growth in sales each.

A fall in sales occurred in Latin American (-11%), but that in large part can be put down to devaluations of national currencies in the region. And as could only have been expected, sales in North America fell – by 25%. All the same, North American users are good at reading between the lines when it comes to what their media tells them. How else can an increase of 8% in online sales of new licenses in the U.S. be explained? I’m often asked if we plan to close our offices in the U.S. and exit the market. No way! Actually, just the opposite: we’re planning on getting back to growth and developing the market.

So, why is it folks trust us? Maybe it’s because over the last year we’ve become the most transparent cybersecurity company in the world? We’ve opened up our source code and its updates, and in essence we’ve established new standards of transparency for the whole industry. And no matter how much nonsense they write about us in the press, still no one has provided even just a shred of technical evidence about any wrongdoing on our part (spoiler alert! They won’t provide any: none exists!). My life is set out before you right here on these here blog pages practically every day. I’ve nothing to hide; my company has nothing to hide! Folks see, think, understand, and vote with their money.

Finally, as per tradition, I simply must thank our users and partners who believe us – and believe in us! And of course all the KL employees, thanks to whom our products and services for many years now have remained the very best. Well done everyone! Now… back to work!

* Unaudited IFRS revenue data. The given revenue figure was rounded up to the nearest million. Actual revenue: $725.6 million.

** The Central Asia and CIS region is made up of: Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Mongolia, Russia, Tajikistan, Turkmenistan, and Uzbekistan.

Je m’appelle Eugene.

Bonjour folks!

A quick official interlude…

The other week it was time to roll out the red carpet again at KL HQ – this time for the French ambassador to Russia, Sylvie Bermann.

Our meet went very well: cordial, interesting, enjoyable. The ambassador and her aides showed great interest in cybersecurity matters, and clearly had a solid professional awareness of all things digital in this modern day. We told them all about our work and achievements in France and French-speaking countries, and shared our plans for development of new technologies and of cooperation with French companies and state bodies. Other topics included our vision of further development of digital technologies in industrial systems, and about possible cyberthreats to industrial infrastructure and how we can fight them together.

So yes, it went swimmingly. Our esteemed guests left us satisfied and certain of our shared cyber-tomorrow.

Btw, the ambassador was driven here in a Citroën C6. You don’t see many of those in Moscow. In fact [as curious as ever and looking it up on the net], you don’t see a great many of them anywhere: there were apparently only 23,384 ever produced, between 2005 and 2012. Nice car. And rather exclusive ).

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Sapiens: spot-on on Homo; way-off on viruses.

Hi folks!

The other day I finished reading the book Sapiens: A Brief History of Humankind, by Israeli historian Yuval Noah Harari: an accessible and at times blunt and cynically portrayed history of mankind. It starts with the appearance of our biological species, its spread across the world, its complex journey through all kinds of pan-human revolutions (cognitive, agrarian, and various technological ones), and ends in the current era. At first the book appears to be a solid popular-science work on a par with Guns, Germs, and Steel or The Journey of Man: A Genetic Odyssey. However, as you progress through the pages, nagging doubts start to form in your mind; then at times comes amazement at some of the inconsistencies; then it gets like… totally… WHAT? But I’ll get to that in due course…

source

Actually, a lot of the facts given in the book have been known for ages. Some we learned in school, others in books we’ve read, yet others in anthropological documentaries or news from archeological digs. However, for me, up until now all that seemed to be stored in my brain in separate bits. Only after reading this book has it all come together as one. So respect is at least due there.

Now, everyone’s heard of Neanderthal man and Cro-Magnon man (our ancient ancestors), and that they lived around the same time and often on neighboring territories. But there were also other Homo species. For example, the Denisova hominins, and the hobbit-like Homo floresiensis (Flores Man) from the Indonesian island of Flores. And there will have been many more, no doubt, which have yet to be discovered. Curiously, many of them disappeared relatively recently: Flores Man, for example, lived around 12,000–13,000 years ago; Neanderthals – between 30,000 and 40,000 years ago.

This means that the definition of homo, or ‘human’, in actual fact doesn’t refer to just folks like you and me. It turns out there are a dozen other biological species that add to that full definition, all of which died out; and Wikipedia agrees with this. We (Homo sapiens) lived together with these other human species at the same time and in the same geographical areas on the planet, and we even crossbred with them (as confirmed by genetic research). Then those other species disappeared, while we stayed. That is, Homo sapiens overcame all its ‘competitor-relatives’ – completely destroying them at the very roots, all to free up for itself an ecological niche to provide for its own sustenance, propagation and further expansion.

But it wasn’t just other human species Homo sapiens wiped out.

Read on…

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Midori-Kuma 2019.

Hi folks!

It’s been a while since I’ve written anything about our beloved green bear-mascot Midori Kuma – nearly two years in fact. That’s a long time in anyone’s life, but especially in this green bear’s – as his schedule is just so full non-stop all year round. Not that it’s all work-work-work though: just recently he’s been kicking back in full chill-axe mode in the snowy expanses of Russia, no less. Quite why, when he’s often to be found in idyllic tropical resorts, I don’t know, but, well, he is a bear after all. Must be an instinct thing. I wonder if he hooked up with some brown bears while there. But I digress…

Anyway. Since his Russia trip he’s taken up a new hobby: he’s now an artist, as in – a painter. And he clearly is a natural. Just look at some of his early works, below. What can I say? Bright, unusual, and incorporating many different styles. And it’s not just me thinks that. Many of his paintings have been snapped up for vast sums already at auctions around the world…

Read on…

Mathematical fanatical 2019 – the answers.

Hi folks!

In yesterday’s post, you’ll recall how I gave you, dear readers mathematicians, a mathematical brainteaser: how to get ‘2019’ using the four main arithmetic operations [+, -, ×, ÷], plus parentheses [(, )’], and the figures 10, 9, 8, 7, 6, 5, 4, 3, 2, and 1; and not in any order but in the order given [10 down to 1] – and with no joining up of the numbers to make bigger numbers.

Budding mathematicians among the readers of my blog in Russian sent in their answers. Here are some of the more elegant runners-up among them:

( 10 * 9 * 8 – 7 * 6 – 5 ) * ( 4 – 3 + 2 * 1 ) = 2019 (by Skarbovoy);

( 10 + 9 ) * ( 8 + 7 + 6 ) * 5 + 4 * ( 3 + 2 + 1 ) = 2019 (by eve_nts);

(10 + 9 * 8 * 7 – 6 – 5 ) * 4 + 3 * 2 + 1 = 2019 (also by eve_nts).

A big thanks to everyone, btw, who sent in answers! I had great fun picking out the right ones, checking for mistakes – and coming up with some formulations of my own.

But back to the podium…

Read on…

Mathematical fanatical: How to turn ‘1’ into ‘2019’?!

Hi folks!

2019. Is it two thousand nineteen, or twenty nineteen? How does it sound to you? “It’s just a number – the number of the year,” you say? Hmm. I think your saying that might mean poetry or just rhythm-and-rhyme aren’t your fortes. Right? For – and not a lot of people know this – there’s a phenomenon known as digital poetry. There are all different kinds of digital poetry, as a quick glance at that Wikipedia page will show you. One kind I find rather intriguing is the one where numbers are substituted for the words of the works of the great poets – and you need to work out who that poet is based on the way the numbers are pronounced – which words are stressed, the number of syllables, and so on.

Here, for example, are some numbers that, when spoken, reflect the poetry style of Alexander Pushkin (at least, in Russian:):

 17 30 48
 140 10 01
 126 138
 140 3 501

I wonder, does it work the other way round? I mean, can a poem be made up about 2019? Might there be some budding digital poets among you, dear readers, who might be able to conjure up a poem about 2019?

Meanwhile, for the mathematicians and physicists among you, my traditional annual arithmetic puzzler…

I hope you remember the rules. If not:

You need to get the number of the current year – this year being 2019 of course – using the four main arithmetic operations [+, -, *, ÷], plus parentheses [(, )’], and the figures 10, 9, 8, 7, 6, 5, 4, 3, 2, and 1; and not in any order but in the order given [10 down to 1] – and with no joining up of the numbers to make bigger numbers (e.g., 1 and 2 making 12).

For example:

 ((10 + 9 – 8) * 7) + (6 + 5) * (4 – 3 + 2) + 1 = 111

Hmm. That gives 111. But I wanted 2019.

All righty. Try it! Who does it first is the winner!

 10 9 8 7 6 5 4 3 2 1 = 2019
 …

Did you do it? Well done!

Now, let’s continue the fun by upping the difficulty a bit: let’s drop the 10:

Read on…

Many a little makes a mickle (of $70m).

I’m often asked why we choose to fight patent trolls. After all, might it be easier – and more economically feasible – to simply give in, pay the relatively small fee they’re after, and be done with it and get back to work?

That does seem to be the accepted wisdom for a lot of IT companies targeted by trolls. But not for KL. There’s a principle involved. Also, there’s the not small issue of saving not small sums of money over the years. ‘How much?’, you may ask. Well let’s just work it out today. The results, below, might surprise you. In fact, it turns out that fighting parasites costs less than allowing them to nibble little by little at our bank balance.

Source

But first, a lyrical digression to demonstrate how things usually go down when dealing with patent actions:

Digression begins:

First off, information about a new patent infringement lawsuit brought against IT Company X appears in the official court publication. Immediately after this, Company X is inundated with letters and phone calls from law firms offering to assist in dealing with the lawsuit, each firm insisting it would do the job much better than all others.

Now, I’ve written this before, and I’ve upset quite a few folks in doing so, but, well, I’m sorry, I just have to repeat it once more as it does appear that folks need reminding about it.

There are different types of ‘lawyers’: there are honest lawyers; there are crafty ‘consumer champion‘ lawyers; and then there’s another set: legal sales pseudo-lawyers. These belong to the rare breed of… con-artists psychologists in expensive suits with authoritative appearances and persuasive patters (anecdotes, witticisms, shrewd observations, success stories…), all of which add up to a convincing impression of reliability and trustworthiness. Oh, and they always want you to sign on the dotted line quickly. So you sign it. Next kicks in the standard scenario: much frenzied ‘work’ is done by the legal sales guys, creating mountains of documentation: petitions, motions, whatever. And all simply to give the impression that signing up with them was the right thing to do, and everything’s going to work out just fine as you’ve got these busy bees working for you.

However, eventually all the hustle and bustle comes to a halt… the legal sales guys suggest ending the legal process through an out-of-court settlement. Of course, that means a payment to the plaintiff and a hefty fee for themselves (which together is often equal to the initial $ demands of the patent troll). However, Company X is made to believe that it has secured itself a great victory, all based on their inimitable legal genius.

And everyone’s happy – Company X, the plaintiff, the lawyers. And that’s how the system works. Company X folks may have a sneaky feeling – especially at night – that somewhere, somehow, something ain’t right, but they just banish such treasonous thoughts further into the back of their minds so as not to get upset.

Digression ends.

Alas, that’s how the great majority of patent court cases end up if an outside consultant is brought in. But why? Because otherwise the consultant would have to actually get to know the company’s products, the technologies used, the documentation, and so on. Doing all that takes a long time. Much easier is to go for an out-of-court settlement and all that work is avoided.

Not that the above scenario is the only one possible. We know patent lawyers and law firms that diligently did do the hard work and eventually were successful – and not only in cases on recognition of patents’ invalidity, but also those on noninfringement of patents.

Still, more than 10 years ago, we took a decision to develop our own patent department. Why?

Because we understood that, (i) with the development of the business there’d be a proportionate increase in the number of trolls wanting to latch onto us; (ii) there was no point in expecting outsiders to help (see the digression above); and (iii) such a department of our own experts would be able to earn the company a decent side income in other ways. Calculations/projections were made, and the department was set up. Fast forward more than a decade, and those calculations/projections have turned out to be fairly accurate (see below).

I’ve already told you about how we do things in the patent courts. All cases were ‘dismissed with prejudice‘ or ‘denied’ (which is almost the same thing). Total funds paid out to patent trolls and to plaintiffs in class action cases: $0. But how much might we have paid? Let’s calculate it:

1. IPAT vs KL: we were looking at payment of 3-5% of our turnover in the U.S. over three years (~$8mln);
2. Lodsys vs KL: $25mln;
3. Device Security vs KL$1.2mln;
4. Three court cases with Uniloc: initially it was assumed that the demands would be similar to those this troll hit Electronics Art with – $5mln – for each case, but in the end Uniloc realized there was zero chance of that happening, so it announced it wanted $1.8mln off us for all three cases. So far, two of those three have been closed in our favor; the third – soon;
5. Wetro Lan vs KL: our efforts saw the case thrown out even before their demands were announced; therefore, we’ll take the minimum expected amount – $1mln;
6. A Class action just like the one against Symantec, the costs of which we’ll take as our reference: $2mln to the plaintiff’s lawyers, $9 (!) to each ‘injured’ person, plus a free three-month license for their commercial product;
7. A Japanese company (I can’t tell you which) sought 5% of our turnover in Japan, supposedly for patent infringement. What’s more, we’d have automatically received the exact same infringement action in the U.S., since issuance to it of a similar patent had already been approved there by the time we’d finalized our negotiations;
8. A claim of a tech partner for compensation of $800,000 for its losing a case for patent infringement of its own product: dismissed.

All the above-mentioned potential costs to us: $70 million! That’s without taking into account a mass of other claims and demands, which were successfully rejected by our team long before compensation was announced. And also not taking into account other non-patent cases like the recent antimonopoly proceedings against Microsoft: the benefits of our victory there are difficult to measure with money, since on the line was the multibillion-dollar business of thousands of developer companies and their partners.

And there’s another knock-on effect of our always sticking to our firm position not to settle with patent trolls: we get hit with far fewer patent infringement actions in the first place. Trolls know we never give in, so they give up trying their luck – more so now, since we’ve started hitting back at the trolls with demands for them to pay our court costs. But quite how much we’ve saved on this account is just too tricky to estimate, so we’ll just have to leave it out.

Still, we can look at our competitors for at least some idea as to how our principled stance has reduced the number of lawsuits heading our way. Over the last 10 years here’s how many patent infringement lawsuits they’ve received:

Symantec – 41; McAfee – 19; TrendMicro – 20; Sophos – 13; Avast – 11.

KL – 8!

Yet we all use very similar technologies, and in theory every lawsuit could be duplicated and directed at any or all other cybersecurity developers. And just for an indication of the sums involved for just one case: last year Sophos lost a patent infringement case against Finjan and had to fork out $15mln (!!).

So there you have it folks: the proof of the patent pudding is in the eating having your own patent department – it saves you much more than you’d spend feeding trolls. Having our own department also allows us to deal with other law-related stuff, like legal expert analyses of products to be released, due diligence, and development of our patent portfolio in the U.S., the cost of which is now estimated at more than $100mln.

Finally, the above-mentioned also confirms the validity and correctness in our motto with regard to patent trolls: ‘We fight to the last bullet – their last bullet!’.

IT antimonopolism: analysis, amazement, (+) frame of mind.

Some readers of the technical part of my blog, wearied by this year’s summer heat, may have missed a notable landmark event that occurred in July. It was this: the European Commission (EC) found Google guilty of abusing its dominant position in relation to an aspect of the mobile OS market, and fined the company a whopping 4.34 billion euro (which is around 40% if the company’s net profit for last year!).

Why? Because, according to the EC, “Since 2011, Google has imposed illegal restrictions on Android device manufacturers [including forcing Android device manufacturers to pre-install Google’s search and browser apps] and mobile network operators to cement its dominant position in general internet search.”

It all seems perfectly logical, apparent, and not unprecedented (the EC’s fined Google heavily in the past). Also perfectly logical – and expected – is that Google has appealed the decision on the fine. Inevitably the case will last many years, leading to a spurious final result, which may never become known due to an out-of-court settlement. And the reason (for the lengthy court case) won’t be so much a matter of how big the fine is, but how difficult it will be to prove abuse of dominance.

Ok, let’s have a closer look at what’s going on here…

Source

Read on…

The end of the beginning in the fight against patent trolls.

For much of August and September of this year I was forced into ‘working from home’, something I don’t normally do. So with zero globetrotting/commuting/working out/interviews/speeches and other daily workday chores, I had rather a lot of time on my hands. So I read. Lots. There was plenty of the usual bad news, but, occasionally, there was some very good news in there too. In particular, there was good excellent news from the front in the fight against patent trolls: a district court of Texas rejected Uniloc’s lawsuit against us for infringement of patent US5490216. This is the infamous patent that since the early 2000s had struck terror into the hearts of IT companies, added years to the appearance of many a patent lawyer, and mercilessly lightened the wallets of more than 160 (!) companies – including Microsoft and Google, no less.

But the excellent news doesn’t stop there folks!…

The combined efforts of the IT industry have secured the invalidation of the IT patent-from-hell. But it’s not just the invalidation itself that’s worth celebrating; also worthy of champagne quaffing is the fact that the invalidation heralds serious (albeit long overdue) change in the U.S. patent system. Sure – it’s only ‘slowly but surely’ for now, but slowly is at least better than no change at all; especially when the changes have global significance: at last the IT industry can start to pluck the patent parasites off its back that do nothing but bloodsuck hinder technological development.

The ball hasn’t merely started rolling, it’s racing down the hill: developers are becoming freer in what they can do – protected against persecution from owners of (excuse my Belgian) BS patents: those describing abstract and at times blatantly obvious things, which in practice aren’t even applied or are used only for ‘milking’ developers of similar technologies.

All told, the story of patent ‘216 reads much like a thriller – so much so that I thought I’d retell it here for your thrill-seeking pleasure. So go get a coffee (better – popcorn) and settle back down for a mini-nailbiter from the patent parasite side…

Read on…

Banksy comes to Moscow!

He’s here folks – the mysterious international graffiti artist of mystery has come to Russia!

Privyet Banksy!

Street art, graffiti and other such hooligan-creativity was once the preserve of the seediest suburbs of, say, New York and London. Today, it’s on show even in the Central Artist’s House exhibition hall just opposite Gorky Park in Moscow, shocking the Russian public in all its avant-garde satirical edginess.

Yes, the Banksy exhibition is running for four months – from June 2 to September 2; so if you’re in the capital over summer, here’s a mandatory must-see for your calendar and all the calendars of everyone you know. For this is not to be missed – by anyone!

Meanwhile, I can’t choose which photo to show you first in this here blogpost. They’re all just so special and individual in their own way. It’s like when someone asks you what your fave song of your fave band is – you can’t really give a proper answer as you like so many! Ok, first photo… it’ll just have to be the first one I took:

Ok, so who is Banksy?

No one apart from himself/themselves // and the police! // really knows. Ok, there are bound to be a few folks know – but they’re all keeping stum about any real identity/ies. I give the plural too as there is a theory that it’s more than one individual – a collective of now probably very rich street artists.

So who are you, Mr. Banks?

Read on…