Finjan is a Leading Innovator of Cybersecurity Technology, with a Comprehensive Patent Portfolio Covering Various Aspects of Dynamic, Proactive Behavior-Based Technology to Limit Malicious Breaches and Theft of Electronic Data, a Top Concern of Companies Worldwide
Finjan (NASDAQ: FNJN) is a pioneering cybersecurity company founded in the mid-90’s by security sector serial entrepreneur Shlomo Touboul. Finjan invented the concept of dynamic, proactive real-time web and network security with behavior-based content analysis technology, among others. It is now one of the world’s leading data security experts. Its patented technologies are helping consumer and enterprise-level customers and clients avoid identity and data theft, spyware, malware, phishing, trojans and other online threats.
Finjan’s patented technology proactively identifies threats by uncovering patterns and behaviors of online viruses and other malicious code as they move into and out of networks and across the Internet. While disruptive at the time, today it is widely integrated into modern security architectures, including enterprise systems as well as mobile devices.
Finjan has a robust global portfolio of more than 40 issued and pending patents and continues to make its technology available through its licensing program. The company is committed to preserving and enhancing the value of its patent portfolio for its existing licensees, investors, and shareholders. Additionally, the Company has become a trusted advisor on the issue of patent reform to lawmakers, propounding balance and fairness for all patent owners to legitimately enforce their patent rights. Some pushing patent reforms overlook the fact that patents are the investment foundation for venture capital to finance innovation and technology development, which has been critical to Finjan’s development.
Growing Market for Cybersecurity Products
Founded in Israel and now headquartered in California’s Silicon Valley, Finjan is among the top cybersecurity companies. Cybersecurity breaches are a serious risk, and extremely costly for businesses, governments, and consumers to resolve. Effective prevention, therefore, is a top priority.
The 2015 Travelers Business Risk Index shows that cybersecurity is near the top of the list of concerns for business leaders. Its data show that 29% of companies surveyed cite cybersecurity problems as risks they are least prepared to handle. Its latest poll showed computer-related issues as the second most important concern for all businesses (58%), compared to 2014, when it was ranked fifth. Some one in 10 businesses and one in five large companies believe they have fallen victim to a cyber attack.
Some sectors are woefully unprepared. For instance, while 58% of healthcare companies surveyed cited cybersecurity as a concern, only 37% have a plan to respond to an attack or data breach.
Costs of Breaches Increasing Worldwide
The cost of cybersecurity-related crime is high and rising exponentially. Costs are calculated on a direct (cost to reproduce or repair data) and an indirect (cost to restore consumer confidence) cost basis. The Ponemon Institute’s and Verizon’s annual data breach reports calculate these costs in great detail. According to the Ponemon Institute’s study on the economic impact of data breaches, sponsored by IBM, respondents globally reported an increase of the average data breach cost per victim to nearly $154 per compromised record, an increase of 9% since 2012.
The study also found the average cost of a data breach increased about 15% from 2012, reaching $3.79 million. The root causes of data breach globally are malicious or criminal attacks, accounting for nearly 42% of breaches. Some 30% of data breach is related to faulty operations of negligent employee or contractor (human factor), and 29% involved system glitches (IT and business process failures).
Stopping Breaches Before They Occur
The advent of cloud computing has increased the need for this behavior-based threat detection.
Finjan’s innovative patented software (later imbedded in hardware security appliances) proactively monitors network and Internet traffic looking for abnormal file behaviors. The technology can flag content for review, marking it as malicious or even pulling it into a contained environment to detonate without impacting a network or computer (i.e., "sandboxing”). As data is analyzed and categorized, a record of the analysis can travel with the content or be forwarded ahead to reduce the duplicative scanning process. This allows real-time efficiencies given real-world limitations on memory, processing, and bandwidth.
Robust Patent Portfolio
Finjan has an impressive portfolio of patents and pending patents in the areas of dynamic and proactive behavior-based security, with new patents continuing to issue through its continuing development efforts. Licensees include Microsoft, M86 Security, Trustwave, Webroot, Secure Computing, McAfee (Intel Security), Websense, and recently, international licensee, F-Secure.
The company has a number of pending litigations against companies it believes are violating its patents. Finjan recently received a favorable verdict in its patent infringement lawsuit against Blue Coat Systems. The jury found all 6 of Finjan’s asserted patents valid and enforceable, and 5 of the 6 patents infringed, awarding Finjan over $39.5 million in damages, exclusive of pre- and post-judgment interest. On July 15, 2015, Finjan filed a second patent lawsuit against Blue Coat (Blue Coat II). Finjan has a total of six pending cases pending in the Northern District of California.
Founding and Investments
In 1996, Finjan was formed in Israel to cultivate proprietary technology that focused on proactively detecting threats to online security Following the development of these security technologies and subsequently receiving world-wide patent protection, Finjan provided secure web solutions, including security software and hardware, to the enterprise and endpoint markets. After locating its headquarters in San Jose, CA in 1997, Finjan raised funding from top tier investors including Cisco, Microsoft, Bessemer Venture Partners, Benchmark Capital, HarbourVest Partners and Israel Seed Partners. Prior to Finjan going public, these funds invested approximately $65 million in cash to develop the technology, now protected by the patents.
The firm started with a few employees in Israel at a time when the country was beginning to be recognized as an “international ground zero” for advancements in cybersecurity. Finjan grew to 150 employees internationally before it spun off its hardware division to M86 Security in 2008.
In 2008, the original software and hardware divisions were spun off and acquired by M86 Security, which merged with Trustwave, which was recently acquired by Singapore Telephone, who continue to manufacture and sell licensed product. Finjan retained its patent portfolio for purposes of licensing its valuable cybersecurity technology to third parties.
Trading on Nasdaq
Finjan went public in June 2013 at an accelerated pace through a reverse merger. The original investors funded the company with approximately $30 million. Finjan completed a listing on NASDAQ in May 2014 under the symbol FNJN.
Finjan has an active investment in Jerusalem Venture Partners’ Cyber Strategic Partners Fund VII, which focuses on next-generation cybersecurity innovations. Specifically, the JVP fund that Finjan is invested in is developing technology to show how viruses are likely to mutate. By predicting threats, IT specialists can build stronger, safer networks. Investing in next-generation technologies that will meet growing threats is the best defense for continued data security.
Release from Non-Compete and New Product Development
Until very recently, Finjan was excluded from producing and selling its competitive products in the security space by a non-compete and confidentiality agreement with its former licensee, M86, now Trustwave, which had the exclusive right to make cybersecurity products using Finjan’s patented behavior-based technologies.
This March 2015, the final terms of that agreement expired, and Finjan re-entered the market, developing and producing its own cybersecurity products for the consumer market.
A Return to Operations
Finjan’s first product focused on consumers, including the Finjan Mobile Secure Browser available at http://mobilesecurebrowser.finjan.com. Tim Shipman, Strategic Director at Yeti, a San Francisco-based hardware integration, virtual reality and data visualization firm, called Finjan’s mobile secure browser a “compact, elegant solution for protecting your mobile device from malicious Internet content.”
This June, Finjan launched CybeRiskTM Security Solutions to provide cybersecurity risk advisory services to meet growing customer needs worldwide. Yoram Golandsky, who previously led Cisco’s Cyber Security Center of Excellence as General Manager, was named CEO of the new company, based in Tel Aviv.
Finjan’s investment in mobile applications and CybeRisk is in line with its strategy to reinvest proceeds from successful cybersecurity investments while continuing its profitable patent licensing program. Licenses to major technology customers have brought in more than $150 million to date.
Active in Patent Reform Discussions and Member of PPAC
The company has been very active in patent reform discussions, by educating lawmakers on how certain proposed patent reforms are unfair to small and individual patent holders, and, importantly, contrary to the original purpose of the U.S. Patent system. Further, Julie Mar-Spinola, Finjan’s Chief Intellectual Property Officer and Vice President of Legal Operations, is a member of the Patent Public Advisory Committee (PPAC) of the U.S. Patent and Trademark Office. PPAC serves as the oversight and advisory board for the US Patent and Trademark Office. There are only 9 members of the public nominated to serve in this prestigious post at any given time.
Creating Transparency for Patent Ownership Worldwide
Finjan is a founding member and among leading companies that participated in the launch of the world’s first Open Register of Patent Ownership, or ORoPo. ORoPo is a voluntary non-profit that makes its data freely available online. Other members include Microsoft, ARM, BAE Systems and Patent Properties. The goal of ORoPo is promote patent ownership transparency and to provide information on who owns the patents granted by the world’s 180 patent offices. Those involved in the issue estimate that 25% of the information is inaccurate, incomplete or out of date. This has serious consequences, as IP assets are estimated to account for up to 70% of enterprise value.
The company remains leanly staffed, with approximately 15 employees in the US and Israel. Finjan is led by Phil Hartstein, President and CEO, who joined the company with deep experience in maximizing the value of patent assets. A leader in the field, Hartstein was once again this year named one of the world’s leading IP strategists by Intellectual Asset Management. The IAM Strategy 300 annually ranks the nation’s top portfolio monetizers.
As Chief Intellectual Property Officer and VP of Legal Operations, Julie Mar-Spinola is responsible for building the company’s IP assets, leading its legal operations and overseeing Finjan’s enforcement program, and the company’s public policy work, including patent reform and cybersecurity.
Michael D. Noonan serves as CFO and Treasurer, and is an experienced financial executive. Previously, he served as a senior director in the finance department of Forgent Networks, an IP company that generated over $140 million in licensing revenues.
The Board of Directors includes:
- Chairman Daniel Chinn, former Venture Partner at Israel Seed Partners and now a Partner of the Israel-based law firm Tulchinsky Stern;
- Eric Benhamou former CEO and Chairman of 3Com and Palm and Founder of Benhamou Global Ventures;
- Glenn Daniels former Managing Partner at Houlihan Lokey;
- Michael Eisenberg, former Venture Partner of Benchmark and now with Aleph;
- Harry Kellogg, former Vice Chairman of Silicon Valley Bank;
- Alex Rogers, Managing Partner with HarbourVest, and
- Michael Southworth, CEO of Contact Solutions.
“Given the increase in cybersecurity breaches and the increase in the cost of those breaches to businesses, we believe Finjan has a bright future, and will continue to be a leader in the data security sector,” said CEO Phil Hartstein. “Malicious hackers who disseminate spyware, malware, trojans and other breach software are continually becoming more sophisticated. Finjan’s innovative products help businesses stay one step ahead to prevent damaging breaches and theft of soft data, and are an important element of any company’s risk management strategy.”
"For Finjan, our current patents and pending patents continue to be the keystone of our licensing programs," continued Hartstein. "We intend to promote and protect the value of our patent portfolio, preferably through licensing,; enforcement through litigation is less preferred. We have recently received a favorable verdict in our infringement case against Blue Coat and we remain confident our licensing program will lead to greater shareholder value."
For more information about Finjan Holdings, Inc., please visit: www.Finjan.com
The company paid consideration to SNN or its affiliates for this article.
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