Facebook ordered to pay $US500 million in lawsuit against Oculus VR

Mark Zuckerberg
Facebook CEO Mark Zuckerberg. Getty / Stephen Lam

A Dallas jury has ordered Facebook to pay $US500 million in damages for a lawsuit that claims its Oculus VR subsidiary was based on stolen tech.

The money will go to game maker Zenimax, who filed the lawsuit against Oculus in 2014 and led Facebook executives like Mark Zuckerberg to testify in a public trial last month.

Oculus wasn’t found guilty of stealing trade secrets from Zenimax, Polygon reports, but the jury did find that Oculus cofounder Palmer Luckey violated a signed non-disclosure agreement with Zenimax during Oculus’s early days.

Zenimax was seeking a $US2 billion verdict against Oculus, and up to another $US2 billion in damages. Facebook will appeal the verdict.

Here’s how the $US500 million verdict breaks down, according to Polygon:

  • Oculus will have to pay Zenimax $US200 million for violating the NDA Oculus co-founder Palmer Luckey signed with Zenimax.
  • Oculus will have to pay Zenimax an additional $US50 million for copyright infringement, and another $US50 million for false designation.
  • Former Oculus CEO Brendan Iribe will have to pay Zenimax $US150 million for false designation.
  • Oculus cofounder Palmer Luckey will have to pay Zenimax $US50 million for false designation.

“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 in a statement. “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 have 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.”

Facebook COO Sheryl Sandberg said the verdict was “not material to our financials” in an interview with CNBC on Wednesday.

We’ve reached out to Zenimax for comment on the jury’s decision.

The lawsuit

John Carmack
Oculus CTO John Carmack. Flickr

At the heart of the lawsuit was Oculus CTO John Carmack, who previously ran a video game company within Zenimax called id Software and is best known as the mastermind behind video games like “Doom” and “Quake.”

Zenimax accused Oculus executives of knowingly stealing its software and trade secrets through the hiring of Carmack and five of his employees from id Software. It claimed that Carmack violated his employee agreement with Zenimax by sharing confidential information that Oculus used as the basis for its VR software.

A lawyer representing Zenimax, Tony Sammi, went so far as to call Facebook’s acquisition of Oculus “one of the biggest technology heists ever” during opening remarks to the jury on January 10.

During the trial, ZeniMax lawyers also tried to cast doubt on the technical know-how of Oculus cofounder Palmer Luckey, who they alleged wasn’t capable of turning the Oculus Rift prototype into a consumer-grade product without Carmack and ZeniMax software.

Facebook has contended that Zenimax’s claims are without merit, and that Zenimax only filed the lawsuit because it passed on investing in Oculus before Facebook bought the company for $US2 billion and an additional $US1 billion in future employee payouts.