Facebook-owned Oculus loses $500m VR legal battle to ZeniMax

2 Feb 2017

Oculus headset. Image: Tinxi/Shutterstock

A US court has awarded $500m in damages to ZeniMax over the breach of an NDA by Oculus founder Palmer Luckey.

A US court has ordered Facebook, as well as Oculus and its founder Palmer Luckey, to pay $500m for the unlawful use of ZeniMax’s virtual reality (VR) technology.

Facebook acquired Oculus in 2014 for $2bn.

VR is set to be a major part of the social media giant’s strategy in the coming years and the company recently hired ex-Xiaomi and Google executive Hugo Barra to lead its VR charge.

Two years ago, ZeniMax launched legal proceedings, seeking $2bn in damages from Facebook and accusing Oculus executives of knowingly stealing software secrets.

ZeniMax sought $6bn. This included $2bn in actual damages and $4bn in punitive damages.

In the three week trial in a Dallas district court, which included a testimony from Facebook founder and CEO Mark Zuckerberg, ZeniMax argued that its early VR innovations were unlawfully copied when Oculus developed the Rift headset.

A rift over Oculus

It claimed Oculus did so by hiring games guru and Oculus CTO, John Carmack, and five of his employees from ZeniMax subsidiary, id Software. Carmack is best known as the mastermind behind the games Doom and Quake.

The jury in the case ruled that none of the defendants misappropriated ZeniMax trade secrets. They did, however, focus on the fact that Luckey and Carmack violated their non-disclosure agreements.

As per the judgment, Oculus will have to pay $300m directly, with Carmack and Luckey footing the remaining sum.

“We are pleased that the jury in our case in the US district court in Dallas has awarded ZeniMax $500m for defendants’ unlawful infringement of our copyrights and trademarks,” said ZeniMax chief executive Robert Altman.

Oculus told Siliconrepublic.com that it plans to appeal the finding.

“The heart of this case was about whether Oculus stole ZeniMax’s trade secrets, and the jury found decisively in our favour,” an Oculus spokesperson said.

“We’re obviously disappointed by a few other aspects of today’s verdict, but we are undeterred.

“Oculus products are built with Oculus technology. Our commitment to the long-term success of VR remains the same, and the entire team will continue the work they’ve done since day one – developing VR technology that will transform the way people interact and communicate.

“We look forward to filing our appeal and eventually putting this litigation behind us.”

Elder Scrolls creator ZeniMax employs 250 people in Galway.

Facebook has a substantial presence in Dublin, where more than 1,000 people work at its international headquarters in Silicon Docks.

Oculus recently acquired Cork tech firm InfiniLED for an undisclosed sum.

Oculus headset. Image: Tinxi/Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years