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Oculus verdict: Judge awards ZeniMax $500 million

Facebook owned VR company did not misappropriate trade secrets as ZeniMax alleged, however [UPDATE: Oculus & ZeniMax both respond]

ZeniMax, which earlier today beefed up its VR development capacity by acquiring Escalation Studios, had a partial victory in its lawsuit against Oculus, makers of the Rift virtual reality headset. As reported by Polygon, a Dallas, Texas jury today awarded $500 million to ZeniMax after finding that Oculus co-founder Palmer Luckey failed to comply with a non-disclosure agreement. That said, the court did not find that Oculus had misappropriated trade secrets, which was at the heart of the lawsuit.

The suit, filed back in May 2014, claimed that Oculus (merely a VR startup at the time) stole trade secrets in order to create its Rift headset. Just a few weeks prior to filing the suit, ZeniMax (which owns id Software and Bethesda Studios) publicly accused former id executive John Carmack of taking the in development VR technology to Oculus. Ultimately, ZeniMax's complaint alleged that Oculus co-founder Palmer Luckey was joined by half a dozen ex-ZeniMax employees to engineer the Rift based on years of ZeniMax's research and copyrighted code.

During closing comments in the case, ZeniMax attorney Anthony Sammi labelled Oculus' actions a heist and stated that ZeniMax is owed $2 billion in compensation and another $2 billion in punitive damages. On the other side, Oculus attorney Beth Wilkinson refuted that notion, stating that ZeniMax's complaint was simply driven by embarrassment, jealousy and anger, as opposed to actual facts.

At the moment, neither Oculus nor Zenimax have issued public statements on the verdict. It's not yet clear what impact this will have on the Oculus business. We've asked for comment and will update once we have more information.

Update: Oculus has now issued the following response to the court's decision: "The heart of this case was about whether Oculus stole ZeniMax's trade secrets, and the jury found decisively in our favor. 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."

Additionally, more details breaking down the $500 million owed have come to light. $200 million of the total comes from Oculus co-founder Palmer Luckey breaking his NDA with ZeniMax, while Oculus will have to pay ZeniMax an additional $50 million for copyright infringement, and another $50 million for false designation. Furthermore, Brendan Iribe (former CEO, now head of PC at Oculus) will have to pay ZeniMax $150 million for false designation, and Luckey also will have to pay ZeniMax $50 million for false designation.

Following Oculus' statement, a representative for ZeniMax sent the following:

"We are pleased that the jury in our case in the U.S. District Court in Dallas has awarded ZeniMax $500,000,000 for Defendants' unlawful infringement of our copyrights and trademarks, and for the violation of our non-disclosure agreement with Oculus pursuant to which we shared breakthrough VR technology that we had developed and that we exclusively own. In addition, the jury upheld our complaint regarding the theft by John Carmack of RAGE source code and thousands of electronic files on a USB storage device which contained ZeniMax VR technology. While we regret we had to litigate in order to vindicate our rights, it was necessary to take a stand against companies that engage in illegal activity in their desire to get control of new, valuable technology.

"Asked to comment on the decision, Robert Altman, ZeniMax's Chairman and CEO, said: 'Technology is the foundation of our business and we consider the theft of our intellectual property to be a serious matter. We appreciate the jury's finding against the defendants, and the award of half a billion dollars in damages for those serious violations.'

"The liability of Defendants was established by uncontradicted evidence presented by ZeniMax, including (i) the breakthrough in VR technology occurred in March 2012 at id Software through the research efforts of our former employee John Carmack (work that ZeniMax owns) before we ever had contact with the other defendants; (ii) we shared this VR technology with the defendants under a non-disclosure agreement that expressly stated all the technology was owned by ZeniMax; (iii) the four founders of Oculus had no expertise or even backgrounds in VR-other than Palmer Luckey who could not code the software that was the key to solving the issues of VR; (iv) there was a documented stream of computer code and other technical assistance flowing from ZeniMax to Oculus over the next 6 months; (v) Oculus in writing acknowledged getting critical source code from ZeniMax; (vi) Carmack intentionally destroyed data on his computer after he got notice of this litigation and right after he researched on Google how to wipe a hard drive-and data on other Oculus computers and USB storage devices were similarly deleted (as determined by a court-appointed, independent expert in computer forensics);

"(vii) when he quit id Software, Carmack admitted he secretly downloaded and stole over 10,000 documents from ZeniMax on a USB storage device, as well as the entire source code to RAGE and the id tech 5 engine -which Carmack uploaded to his Oculus computer; (viii) Carmack filed an affidavit which the court's expert said was false in denying the destruction of evidence; and (ix) Facebook's lawyers made representations to the court about those same Oculus computers which the court's expert said were inaccurate. Oculus' response in this case that it didn't use any code or other assistance it received from ZeniMax was not credible, and is contradicted by the testimony of Oculus programmers (who admitted cutting and pasting ZeniMax code into the Oculus SDK), as well as by expert testimony.

"We will consider what further steps we need to take to ensure there will be no ongoing use of our misappropriated technology, including by seeking an injunction to restrain Oculus and Facebook from their ongoing use of computer code that the jury found infringed ZeniMax's copyrights."

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James Brightman avatar

James Brightman


James Brightman has been covering the games industry since 2003 and has been an avid gamer since the days of Atari and Intellivision. He was previously EIC and co-founder of IndustryGamers and spent several years leading GameDaily Biz at AOL prior to that.