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Oculus Vows Appeal of $500 Million Verdict, ZeniMax Threatens Injunction

Oculus Vows Appeal of $500 Million Verdict, ZeniMax Threatens Injunction

The legal battle between ZeniMax Media and Oculus VR has a verdict from the jury. In the first of many questions put to the jury, they decided Oculus did not misappropriate trade secrets.

The jury, however, also decided that Oculus co-founder Palmer Luckey failed to comply with a non-disclosure agreement he signed, as did Oculus by extension. Oculus and its co-founders Luckey and Iribe were found to owe ZeniMax $500 million as a result of copyright infringement and “false designation.” We’ve uploaded the full 90-page document the jury filled out here.

Oculus released a statement vowing an appeal:

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.

ZeniMax released a statement as well threatening an injunction:

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.

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.

ZeniMax CEO Robert A. Altman also released a statement:

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.

ZeniMax first accused Oculus of theft of its technology shortly after the announcement that Facebook was to acquire the startup back in 2014 for $2 billion (now thought to be $3 billion). It claimed that the Oculus Rift VR headset was built using its own technology and that John Carmack, the legendary game developer formerly of ZeniMax-owned id Software, had used its resources to offer essential help in developing the Rift.

Carmack does have ties to the Rift dating back to 2012, when creator Palmer Luckey sent him an early prototype that Carmack would demonstrate at that year’s E3 running id-made Doom 3: BFG Edition. The help Carmack offered Oculus during this time and the dispute of what code was made available to Oculus made up much of the trial.

The verdict comes after a trial that saw figureheads at Facebook, Oculus, and ZeniMax take the stand. Most notably, Mark Zuckerberg, CEO of Facebook, answered questions. He stated that “Oculus products are based on Oculus technology.”

We also saw the emergence of Luckey, around four months after he fell off the radar following the revelation he had helped fund a political propaganda campaign. Luckey was insistent that he had built the Rift on his own, despite claims from ZeniMax that he lacked the knowledge to do so. Former Oculus CEO Brendan Iribe also gave his account of the origins of the company, and Carmack himself took to the stand to defend himself.

Garrett Glass is a freelance writer based in Texas. He spent the last few weeks following the case for UploadVR.

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