ZeniMax vs Oculus VR Lawsuit Update – They Made a 500 Million Dollar Mistake

We’ve previously touched on the lawsuit that went down between ZeniMax and Oculus VR and the end results were not pretty for the Oculus brand. Palmer Luckey, Oculus Co-Founder, was found guilty of violating his non-disclosure agreement with ZeniMax according to a report and was forced to pay up $500,000,000. That’s a hefty mistake. The bulk of this case centered around a non-disclosure that Luckey previously signed to prevent sharing of trade secrets. Here’s what went down:

The agreement itself was made before the Oculus Co-Founder, Luckey, started working with ZeniMax. This non-disclosure’s purpose was to prevent Oculus from using/utilizing trade secrets from ZeniMax. There was also the allegation that there were documents that were stolen in a competitive manner by John Carmack. Carmack was previously attached to iD Software and then later became the CTO at Oculus. See the problem?

Though Luckey was found guilty at breaking the Non-Disclosure, Oculus was cleared of being accused of abusing trade secrets. The 500 million dollar verdict came as a surprise with many of the allegations dropped. The earlier reports highlighting the case did not include all of the details within this case, and we will update this story accordingly. In retrospect, the 500 million was a lighter judgement when the original sum sought was 4 billion dollars. Here is the break down of the fines:

  • $200 million for breaking NDA
  • $50 million for copyright infringement
  • $50 million for false designation
  • $150 million from former CEO Brendan Iribe, $50 million from Luckey

Since the verdict, Oculus has released a statement:

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’s response:

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.”

If you are feeling extra savvy in your legal prowl for knowledge, you can read the full outcome of the suit here.  Things are about to get even more serious for Oculus because if the injunction is granted, ZeniMax can halt sales of Oculus Rift indefinitely.

What are your thoughts on the judgement regarding this lawsuit? Fair, too harsh, or not harsh enough? We’d love to hear your thoughts on the issue presented by these two parties after such an ugly turn of events that will affect the gaming community. Sound off with your thoughts in the comments below and tell us what you think!

Liana Ruppert578 Posts

With an arguably unhealthy obsession with Mass Effect, Liana has been an avid collector of gaming and comic memorabilia for well over two decades. With a passion for writing, gaming, and comics - she is currently working as Editor-in-Chief for the revival of Prima Games, with previous managing editor experience with several gaming publications including ComicBook.com, The Hollywood Reporter, TwinGalaxies, and other outlets. She is also the Co-Owner and Managing Editor for DFTG. You can find her on Twitter, Instagram, as well as several Facebook communities online.

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