Facebook Struggles In Legal Fight To Keep The Oculus Rift On Shelves

Facebook was back in federal court today to plead with a judge to reject ZeniMax's request to halt sales of the Oculus Rift headset. The argument by Facebook's lawyers could work, but it sure doesn't make the company's defence against the original suit look any stronger.

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ZeniMax Asks Court To Halt Oculus Sales Completely

Earlier this month, ZeniMax won a $US500 million ($651 million) lawsuit against Oculus and its parent company Facebook. The court ruled that the VR headset manufacturer had indeed violated the company's copyrights and a non-disclosure agreement. That half a billion looks like it wasn't enough because ZeniMax wants blood. It has now filed an injunction demanding all products using the infringing code be removed from sale.

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In February, a jury ordered Facebook to pay ZeniMax $US300 million ($396 million) in damages over violations related to a non-disclosure agreement and trademark claims. Facebook is fighting the verdict and ZeniMax upped the ante by filing for an injunction on the sale of unspecified models of the Rift. Yesterday, US District Judge Ed Kinkeade listened to Facebook's counsel explain that banning all sales of the Oculus Rift headset would place an unfair hardship on the company that currently has a market cap of $US441.25 billion ($582.8 billion).

According to court filings seen by Bloomberg, Facebook insists that a sales block "would serve no one but ZeniMax, who would use it only as leverage to try to extract money from Oculus". It adds that "the injunction would create a windfall for ZeniMax while detracting from the public's enjoyment of Oculus's groundbreaking products".

It seems like ZeniMax wouldn't really dispute those claims, at least not in private. The company considers itself the victim in this situation. In the original lawsuit, ZeniMax claimed that trade secrets were stolen by its former employee John Carmack. Carmack left to become the chief technology officer of Oculus in 2013. An expert witness testified that in January that in his review of Oculus code, he found many instances of ZeniMax's trade secrets were being used. The jury ultimately decided that the most egregious wrongdoing was a violation of a non-disclosure agreement that Oculus founder Palmer Lucky signed in 2012. The jury decided that Facebook hadn't "stolen" trade secrets, but it did improperly use them. For that, it was ordered to pay $US50 million ($66 million).

For ZeniMax, the Oculus Rift headset is improperly using its trade secrets, therefore it shouldn't be sold until it stops doing so. This is where Facebook's argument becomes pretty weak. The VR unit claims in the filings that it "would have to hire clean-room engineers to make myriad changes not just to the code fragments ZeniMax presented at trial, but to numerous other segments of interrelated and interdependent code". Some might rephrase that as: "Our headset doesn't work without their code."

But according to Bloomberg, it isn't easy to get products pulled:

If the judge decides ZeniMax can be made whole with money, then he's unlikely to disrupt Facebook's business. US District Judge Ed Kinkeade will consider Facebook's chances of winning on appeal, the existing or potential harm to each company and what's in the public's interest.

Kinkeade declined to make a decision today. He suggested that the two parties try again to reach a settlement.

VR is a big bet for Facebook, and they see it as part of long-term strategy that will integrate with its core social media network. The VR market is moving slowly and Oculus was projected to be in third place by a report in late 2016. If Facebook has to go back to the drawing board, it would lose even more of the VR marketshare and the consequences could be enormous. It's probably a safe bet that they will be feeling pretty generous at the negotiating table.

[Bloomberg]


Comments

    I love it when big companies get all pissy with each other. Warms the cockles of my cold dry shriveled heart.

    It the end the one that get the worst are Oculus Rift owners like me. If it ever get halted from sales and developers moved away from it, Rift will die :(

      If only it was a piece of hardware implementing an open standard API, rather than trying to be a "platform" ...

    Facebook should really just ask hem how they can work together for the good of consumers.
    More should act like tmthe company behind Miffy the rabbit and Sanrio, who were taken to court because their rabbit, My Melody, was almost a dead ringer.
    After Fukushima, both companies quickly settled and donated what they would have spent to charity. As part of the settlement, My Melody wears the red head gear as seen in her cosine for Mario Maker.

      Haha good luck with that. Zenimax are only in it for themselves

        You think Facebook are any different?

          Well, yeah. They're the ones actually developing and furthering VR.

            And why are they doing that, do you think? Because they love giving to the people? You're not that naive. Facebook owns Oculus solely because of its profit potential. Zenimax wants to protect their own technology solely because of its profit potential. They're no different.

              The whole reason Carmack jumped ship to Oculus in the first place was because Zenimax wasn't interested in pursuing VR. Regardless of how you want to bring it back to "these guys are just trying to make money" (like anyone who has a job I guess?), only one of the two companies is actually pushing VR to do so.

                Carmack left because Zenimax wasn't interested in investing in VR versions of id Software games at the time (specifically Doom and Wolfenstein), not because they didn't want to work on VR as a platform.

                It's hardly surprising that the company that has VR tech available for sale right now is 'pushing VR', that's their sole revenue stream. But at the end of the day it's still based on technology someone else made that they don't own and have no right to use. The fact they happen to have something you want right this instant is an incredibly superficial view of the story.

                  It's not even to do with right now, they've been pushing and investing in it for years bringing it way beyond what the devkits could do and even what the consumer version would have been without the facebook funding. Meanwhile Zenimax turned down the opportunity to invest in Oculus and... are just getting around to porting three old games into VR?

                  Zenimax are just a company of lawyers and dodgy bankers out to make a quick buck and are sour at letting the golden goose go. I wish I could better recall any of the details I've read about it all but I don't believe they created any technology and only lay claim to it with the bogus "non-literal copying" thing from the court case.

                  If anything the superficial view has nothing to do with "I want this thing right now" and just my dislike for the company over how shittily they conduct themselves in anything ever. They can go burn for all I care.

                Zenimax actually spent a number of years collaborating with Oculus on their VR tech. That is why the Non-Disclosure issue came up in the first place, because the results of that collaboration were supposed to remain the property of Zenimax and not be disclosed or utilised by Oculus personnel outside of when they pertain specifically to Zenimax software, as per the NDA all parties signed. A number of innovations regarding processes to overcome certain technological hurdles were developed over that time, and those innovations later appeared in paraphrased form in the Oculus coding. The only reason Oculus isn't partially owned by Zenimax is Oculus refused to allow them to buy stock towards the end of that collaboration, resulting in a fairly discordant termination to the collaboration, as Zenimax was fairly interested in putting further use to the innovations. Which, it turned out, happened anyway, just without their being involved or approving their use as required by law.

      At this point, Zenimax won't concede. They're out to destroy Oculus. They've got their reimbursement for the code being used and the breaking of the NDA. Zenimax has no reason to pursue this case any further. The sale of the Oculus is not affecting their business in any way. It's not losing Zenimax sales, it's not competing with any Zenimax products, it's not affecting Zenimax's bottom line AT ALL.

        The award from the previous case wasn't reimbursement, it was damages. Oculus still doesn't have any rights to Zenimax's property and ongoing use constitutes an ongoing offence.

        Think of it as though I broke into your house and started living there. The first trial forced me to pay you for breaking in, but after the trial I keep going back and living in your house anyway. You'd go to court or the police to get an order to stop me from entering your house. Same thing here, Zenimax is seeking a court order to stop Oculus from continuing to use property they don't own.

        As for not affecting Zenimax's bottom line, we don't know what Zenimax plans to do with their technology (which they developed, keep in mind). At the very least it has licensing value.

          What I remember from the initial case was that Carmack proposed VR to Zenimax and they turned it down. I remember the code being stuff that Carmack himself had written while still working at Zenimax. I would hardly call that something that "they developed". But, I haven't read anything about the first case in quite a while.

            Understandable, there's a lot of misinformation around from people who take sides and want to paint their side as the good guys. The actual details we know are:

            - Zenimax was already working on VR technology, but not heavily. Carmack proposed making VR versions of Doom and Wolfenstein, which Zenimax wasn't interested in funding at the time.

            - Zenimax (Carmack and others) worked with Oculus while they were developing the Rift prototype. While an employee of Zenimax, Carmack gave Oculus access to proprietary technology Zenimax had developed. Carmack was one of those developers.

            - Oculus deliberately avoided negotiating a licence fee for Zenimax's technology and broke the NDA they'd signed by including it in the Rift without a licence. They also misrepresented that technology as belonging to them. These were the three areas the court ruled in Zenimax's favour; NDA violation, copyright violation and false designation.

            - The charge that was not upheld by the court was trade secret theft. That related to material that Carmack took with him when he left Zenimax to join Oculus. Zenimax alleged Carmack destroyed the evidence when he found out about the lawsuit (Carmack denied that). The court's independent forensic expert found that 92% of Carmack's hard drive had been wiped just after notice of the lawsuit. Carmack did admit to taking the documents, some of which "may have included source code", but lack of hard evidence led to the court ditching that charge.

            Everyone's a little biased. Just for the record, I think Zenimax are a pretty scummy company, I think Facebook are cancer, and aside from Luckey being an idiot I had no opinion of Oculus before this case. But on the balance of everything we've heard I think Zenimax are in the right. Zenimax code is key to the Oculus working (their own admission), but they refused to licence it before the court case and if I were Zenimax I probably wouldn't trust them to licence it properly now either. So the only alternative is to deny them access to that code, which would mean an injunction on any products that use it. It sucks for Rift owners, but at the end of the day Oculus are the ones who caused this to happen, not Zenimax.

    as much as dislike zuckerberg and facebook, Zenimax sound like complete aholes

    Maybe this would be a good time for Facebook to make a Steam VR driver for their headset, you know just in case it dies ;)

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