Tech Companies Beware: Oculus Fined $500M over Code Violation
A Texas jury on Wednesday found that Facebook's virtual reality (VR) unit Oculus directly infringed on the copyright of video game publisher ZeniMax, as well as ZeniMax-owned id Software. For this and other legal violations, jurors ordered Oculus and two of its executives to pay ZeniMax a total of $500 million.
Facebook has said that it plans to appeal the decision, according to a report in the Wall Street Journal. Oculus also released a statement welcoming the fact that jurors rejected some of ZeniMax's allegations, which combined could have led to total damages of $2 billion.
Oculus, which released the first commercial version of its Oculus Rift VR system last year, was purchased by Facebook for $2 billion in 2014. ZeniMax and id Software filed a complaint against Oculus and co-founder Palmer Luckey in May of that year. The lawsuit was later amended to add Facebook, former Oculus CEO Brendan Iribe and John Carmack, a co-founder of id Software -- acquired by ZeniMax in 2009 -- who left that company to join Oculus, where he serves as CTO.
Findings Include Copyright, Trademark Infringement
In its original complaint, ZeniMax said that it had provided Oculus and Luckey with access to intellectual property that it had developed "after years of research and investment. This valuable intellectual property included copyrighted computer code, trade secret information, and technical know-how."
Despite having signed a binding non-disclosure agreement regarding that property, Oculus and Luckey "commercially exploited it for their own gain" and stood to reap "billions in value" from that information, ZeniMax added.
In a 90-page summary of its findings, the jury hearing the case dismissed some of ZeniMax and id Software's complaints, but decided in their favor on a number of issues, including copyright infringement, breach of contract, trademark infringement and false designation. The jury ordered Oculus to pay total damages of $300 million and also awarded the plaintiffs $150 million in damages from Iribe and $50 million from Luckey.
"Expect more motions to get filed in the trial court, including ZeniMax seeking millions in attorney fees," IME Law attorneys Matt Hooper and Brian Sommer wrote yesterday in an analysis of the verdict published in Road to VR. "Although the verdict has been announced, it’s not likely the end of the case, but actually a second beginning. Given the high stakes of this case, expect a number of post-verdict motions and appeals, resulting in the case dragging on indefinitely."
Plenty of Colorful Twists
In addition to serving as a potential warning to technology firms as well as tech executives who frequently change employment to establish new companies or join competitors, the ZeniMax/Oculus case offers a number of other colorful side stories.
"Although ZeniMax isn’t a household name, the Rockville, Maryland, company has some powerful and famous connections. Its board includes President Donald Trump's younger brother, Robert; CBS Corp. CEO Leslie Moonves; Hall of Fame baseball player Cal Ripken Jr.; and blockbuster movie producer Jerry Bruckheimer," according to the Mercury News. "In addition, ZeniMax CEO Robert A. Altman is married to Lynda Carter, who played Wonder Woman in the 1970s TV series."
Meanwhile, Oculus co-founder Luckey faced harsh criticism last fall after news emerged that he had contributed $10,000 to a Nimble America campaign against Hillary Clinton, the Democratic nominee in the 2016 presidential race.
And yesterday, Carmack took to Facebook to lambast the expert witness testimony offered against him, Oculus and the other defendants during the trial.
The plaintiff's expert, "said Oculus's implementations of the techniques at issue were 'non-literally copied' from the source code I wrote while at Id Software," Carmack said. "This is just not true."
Carmack added, "Notably, I wasn't allowed to read the full expert report, only listen to him in trial, and even his expert testimony in trial is under seal, rather than in the public record. This is surely intentional -- if the code examples were released publicly, the Internet would have viciously mocked the analysis."