Jury Awards Zenimax Half A Billion Dollars In Oculus Lawsuit [Updated]

The lengthy legal battle between Oculus and Zenimax just wrapped up. A Dallas, Texas jury has awarded half a billion dollars to Zenimax. The reason? Apparently, Palmer Luckey didn't comply with a non-disclosure agreement.

Palmer Luckey (AP Images)

The lawsuit began with Zenimax accusing the virtual reality company of "illegally misappropriating" their trade secrets back in 2014. Zenimax claimed that id Software co-founder John Carmack had provided technology to Oculus before ever going to work with them. They even went so far as to claim Palmer Luckey wouldn't have been able to conjure up the Oculus Rift without Zenimax's help. Zenimax also alleged that Oculus infringed on their copyrights and that Luckey violated a non-disclosure agreement he signed with Zenimax in 2014.

Today, however, the jury found that Oculus did not misappropriate trade secrets, according to Polygon. Still, they awarded Zenimax $US500 million ($659 million) over the aforementioned non-disclosure agreement. Here's how it breaks down: Oculus has to pay $US200 million ($263 million) for breaking the NDA and $US50 million ($65 million) for copyright infringement. Oculus and Luckey each have to contribute their own $US50 million ($65 million) slices of the pie for false designation. Lastly, Oculus co-founder Brendan Iribe has to pay $US150 million ($197 million), also for false designation.

The case certainly aired some dirty laundry. Facebook, for instance, claimed that Zenimax sued because the company passed on a proposed partnership with Oculus before Facebook snatched the then-scrappy company up. "This case, because Zenimax and the owners of Zenimax feel badly, embarrassed, humiliated, that they didn't do the deal, that they didn't invest in this VR technology when they could have, they want to rewrite history," Beth Wilkinson, a lawyer for Facebook, said.

Oculus co-founder Brendan Iribe, meanwhile, claimed that Bethesda Softworks' president played dirty, calling the Oculus team "kids" and saying he'd put a halt to all of Carmack's VR work if Oculus didn't agree to a 15 per cent equity with Zenimax.

At another point, ex-id Software programming legend (and current Oculus employee) John Carmack confessed to taking thousands of documents and lines of code from Zenimax before he departed. "I copied files that I shouldn't have. I think stealing is an uncharitable way to look at it since I didn't benefit and ZeniMax didn't lose, but I shouldn't have done it, and I did," Carmack said while being questioned by Zenimax's lawyer.

It remains to be seen how this will affect Oculus' plans going forward. Obviously, though, this likely changes a few things.

Update (11:02AM): Oculus has issued a statement to Kotaku about the result, saying (among other things) that they intend to appeal:

“The heart of this case was about whether Oculus stole Zenimax’s trade secrets, and the jury found decisively in our favor,” Oculus 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.”

In a statement to Polygon, Zenimax said they may seek an injunction against Oculus to temporarily halt sales of the Rift:

“We will consider what further steps we need to take to ensure there will be no ongoing use of our misappropriated technology,” said a Zenimax rep, “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.”


Comments

    Palmer Lucky even more in the doghouse. I'd expect to see him quietly dropped this year.

      That or he's never leaving Alaska ever again.

    An odd finding, but that's to be expected when you put technical cases in front of juries, which only the US seems fond to do.

    The NDA violation was pretty much a given, the details about that were well established before the case even went through and Luckey's terrible attempt at defence ("but I didn't get anything in exchange for my silence!") was transparently false from the outset.

    What's interesting is that the jury decided trade secrets weren't misappropriated. It's an unusual decision because it's pretty integrally written into the NDA - ie. if there were no trade secrets shared, there would have been no reason for the NDA to exist at all. The NDA specifically mentioned trade secrets and ensured that Zenimax retained ownership of them. Luckey signed it, so why would the jury decide in this way? I guess we'll have to wait to see the ruling document to see if the jury verdict is expounded on.

    I still think Palmer Luckey is a weasely, opportunistic manchild, and this ruling certainly does nothing to dispel that image.

    Last edited 02/02/17 8:30 am

    Half a billion? Facebook probably spend more than that on new beanbags for the office each month. I think they'll survive this.

      Considering Facebook acquired Oculus for $2B, another $300M (Oculus' share of the penalty) is a sizeable hit that they're not going to be happy about, especially since Oculus hasn't turned a profit at all to date. The other $200M is to Luckey and Iribe personally, which I doubt Facebook will be keen to pay on their behalf.

      Last edited 02/02/17 8:56 am

        Spot on. Investors in particular don't like shit that casts shade on a product in this way. Not to mention the impact from here on in and the ever looming spectre of GABEN in the distance.

      Considering their net income for 2015 was 3.7billion 0.5billion is a big hit to them.

    Carmack: "Ok I stole... but heres my alternative facts..."

      "Well technically I came up with it so I didn't steal it."

      "I'm sorry Mr Carmack, that's not really how this works."

      "WELL THAT'S JUST LIKE, YOUR OPINION, MAN."

      The real question was, did Carmack use whatever he stole? The jury said he didn't, or, there's no proof he did. I'm not convinced he did, either. Pretty sure he's smart enough to only use what was in his head, and Zenimax can't own that.

        No, the real question is, did Carmack steal anything. You're aware he confessed right?

        John Carmack confessed to taking thousands of documents and lines of code from Zenimax before he departed. "I copied files that I shouldn't have. I think stealing is an uncharitable way to look at it since I didn't benefit and ZeniMax didn't lose, but I shouldn't have done it, and I did," Carmack said while being questioned by Zenimax's lawyer.

        This is theft, unless we live in a world of 'alternative facts'...

        Last edited 02/02/17 2:46 pm

          Oh yeah, I read about the confession. The trial wasn't about that. The trial was about whether what he took was used in Oculus tech. Jury said No.

          Trial also ended up being about broken NDAs. To which the Jury said Yes.

          But the question was whether any of Zenimax's technology was used in making the Rift. If all he stole was a copy of the lunch menus for the whole time he was working there, then that's hardly relevant to the case at all is it?

          For some reason all the news stories everywhere like to omit that part where the "stealing" was him making a copy of all his e-mails (which invariably would have contained snippets of code), and make it sound like he nicked off with thousands of files of code. Thus that "uncharitable" quote from him. But regardless of whether it is stealing or not, nothing that was taken there was used in the Rift so it hardly matters for the case at hand.

        Why take it in the first place then?

        He totally and unequivocally did the wrong thing.

          He took emails. He took some files. Yep, he did the wrong thing. He admits it was wrong. He probably took it for sentimental reasons.

          It wasn't what the trial was about, though.

    Won't be long before Carmack is actually making games again - I hope.
    VR seems like a dead horse and I don't think that even a master of programming like Carmack can revive it.

      Seems like 3d, a fad that pops up every few years promising the world, whipping everyone into a frenzy, I stand around looking at it going "Shit I remember last time" while the hordes shout me, and many others down telling us its shiny, new and not like last time. Then they join us next time as the next lot tell us "It's not like last time!" lol

        I think it's likely the tech is here to stay. Too many large players (Valve, Facebook, Zenimax, Samsung, Google, Microsoft, etc.) are involved and things are already getting scrappy over who owns what. As a product family, VR and AR both have substantial application across many industries other than gaming.

        I don't see much fad-ish about this at all. It's much closer to smartphone proliferation after 2007, but we're starting from a position of greater fragmentation so it's harder to predict the course this wave will follow.

          We'll see. Companies shell out big money for tech all the time, researching it, buying out companies, it's always a risk. We'll see in five years time if its still here.

            Agreed, wait and see is the best we can do right now. I'm not a blind VR evangelist by any stretch, but I am lucky enough to have used both major HMDs (Rift and Vive) and developed some in-house software for them with Valve's OpenVR SDK.

            The Vive particularly stands out with superior roomscale and motion tracking (although Rift is catching up). Being able to move around a room and literally reach and touch things in simulated space is unlike anything else I've experienced. It's certainly nothing like 3D TV. There's still a lot of improvement needed (the three C's: Comfort, Cost, and Convenience are the biggies), but even what we have now is impressive.

            That's not to say it will succeed, of course. But it's also a good reason to pay attention and keep an open mind. As a developer, this feels like 2007 all over again.

          Maybe. You probably know more about it than I do but I remember when every new tv had a 3d mode and came with glasses. That died pretty abruptly.

          I think it's a cool technology but if people don't buy it, it's going to get cancelled. It's just capitalism.

          You could have said the same thing about 3DTV. And while you can still purchase 3D Blu-rays, it is a decidedly niche market. There's no 3D broadcast TV any more, and it doesn't seem to be one of the bullet points in the marketing of new TVs.

          VR won't necessarily go the same way, but big industry investment doesn't always lead to success.

      I don't think it's a dead horse yet, but it always feels like a slightly winded one. I'd be way more likely to invest in a decent, manageably sized VR set if there were more films and interactive documentaries on the platform.

      I mean games are fun of course, but walking around in a real volcano/space station/Egyptian tomb or whatever is going to be where it's at for me.

      Last edited 02/02/17 2:22 pm

        I think that people these days expect new technologies taking the world by storm and instantly shifting the paradigm. Many technologies, though, work their way slowly up, having a few enthusiastic adopters and slowly ingraining itself in the industry until most of the kinks have been worked out and new products start becoming integrated with it. For example, it took .mp4 around a decade to become the new standard, even though it always was better than the alternatives.

      I'm always amused by people calling out VR as dead, when it's barely begun. Not saying it won't die, but it could also easily explode in popularity, or become subdued until a future resurgence. It'll take many years before anyone can properly call it one way or the other.

      I think VR, as a technology, is here to stay, but it'll take a few hardware iterations before it becomes powerful enough, convenient enough, and cheap enough to be adopted by the masses. By which time we'll be looking back on the current headsets, and wondering how the hell we could get away with using VR on that crap.

        Which is why I ain't jumping on till at least generation 3. I'm waiting for their stuff to be sorted and that they know what they're doing.

        And there are some killer apps for it as well. Then I'll be interested. Thinking it's still 5 years away easily.

          It's a smart move to wait, although the industry does need to be supported while it gets onto its feet. Imagine if nobody bought the first iPhone. We would not have smartphones as they are now. Everyone benefits because of the initial adopter. Sucks to be the person who bought that first one, though.

            Does it though? I'm having a great old time with my Rift (and so has everyone I've demoed it to), I won't at all regret all the years of use I got out of it before things become mainstream.

              I'm an early adopter myself, and I'm definitely enjoying it. It does suck that, as things improve, I'll want to upgrade to the latest and greatest. But such is life, and I most certainly want this technology to succeed.

            Seriously? The industry needs to be supported? What kind of weird thinking is that?

            So we should all run out in invest in hardware that we know will be much better and cheaper a couple of years from now? So they make it?

            No way. Not me. Not happening. I have enough equipment over here. I buy stuff when I need or want it. Never to support an industry. Industry shouldn't need supporting. They should make great products that people want to buy. That's how it should work.

              They do make great products. VR works, and it works well. In the future, as people buy more units, they'll improve it even more. They both go hand-in-hand. Industry can't improve unless people buy, and more people will buy as things improve. That's what I mean by "the industry needs to be supported".

              If everyone waited for hardware to be much better and cheaper a couple of years from now, it'd never happen. It's not weird thinking. It's the way the world works.

                I understand what you're saying. It's kind of like, what comes first, the chicken or the egg. You're right though, it is how the world works. If they can't make a good product, people won't buy it, and in a couple of years it won't happen. The onus is on them to bring the right products to market.

                That's why the iphone worked. It wasn't because people were supporting it because they knew the iphone 6 would be great. It's because people found it great to use full stop. That's what any new product has to do. Without that, VR is not going to take off.

    VR - the wave of the future that quietly died because it priced itself higher than market expectations.

    Goodbye Oculus, this will likely end it for them.

    i dont see how an NDA violation is worth half a billion dollars especially when they were found to not have stolen trade secrets. this to me sounds like a case of Jury Nullifaction and people just going against facebook because they have never heard of Zenimax before ( everything game wise is published as Bethesda after all not Zenimax)

      The value may have to do with that "While you were violating your NDA and non-compete clauses you made a 4 Billion dollar deal"

      It's not just NDA violation, it's also copyright infringement and false designation. They're all wrongs that Oculus benefited commercially from, so the penalty is proportionate to that.

    Occulus: We didnt steal VR from Zenimax (we just stole their people)

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