Virtual Reality Infringement Lawsuit Ends in $500 million Damages

ZeniMax Media LLC was recently awarded $500 million in its trade secret and copyright infringement case against Facebook Inc. stemming from Facebook’s purchase of Oculus.

ZeniMax had requested $2 billion in damages and $4 billion in additional punitive damages from its claims that Oculus improperly appropriated key pieces of software, before Facebook purchased the virtual reality company in 2014.

ZeniMax claimed that John Carmack, the founder of id Software LLC, a subsidiary of ZeniMax, collaborated with Oculus co-founder Palmer Luckey in designing Oculus. ZeniMax also claimed that Carmack was instrumental in drawing attention, including eventually from Facebook, to the virtual reality headset.

In contrast, Oculus and Facebook denied using Carmack’s code, and claimed that their own employees developed all of the technology. Facebook CEO Mark Zuckerberg took the stand at trial and testified that he had never heard of ZeniMax before.

ZeniMax also sought punitive damages from Facebook’s alleged gross negligence in its due diligence before it purchased Oculus, and because of Carmack’s actions in copying thousands of emails – some including source code – before leaving id Softward.

Of the $500 million judgment, $200 million comes from a finding that Oculus co-founder Palmer Luckey violated a non-disclosure agreement, $50 million represents Oculus’s copyright infringement, and the remaining $250 million will be paid by Oculus, Luckey, and former Oculus CEO Brendan Iribe for false designation.

Oculus will reportedly appeal, telling Polygon, “The heart of this case was about whether Oculus stole ZeniMax’s trade secrets, and the jury found decisively in our favor.”  On the other side, ZeniMax will reportedly consider seeking an injunction to stop the use of misappropriated code in Oculus Rift headsets.

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