Zenimax has been awarded $500 million by a Dallas, Texas jury today in a court case versus Oculus as reported by Polygon.
The lawsuit initially began in May of 2014 with allegations that the Rift appropriated technology from Zenimax including code, trade secrets, and technical knowledge of VR technology. After over two and half years of litigation, a jury has returned the verdict – the VR headset company must pay Zenimax $500 million for Palmer Luckey’s failure to comply with a non-disclosure agreement that he signed with Zenimax. Oculus is responsible for $200 million of the payment for breaking the NDA and $50 million for copyright infringement. Additionally, Oculus and Palmer Luckey must pay $50 million apiece for false designation and Oculus co-founder Brendan Iribe must pick up $150 million for the same charge. The jury did not find that Oculus had misappropriated Zenimax’s trade secrets.
The decision came down after two and a half days of deliberation by the jury. Although $500 million is quite the hefty bill, Zenimax was seeking $2 billion in compensation and an additional $2 billion in punitive damages. Oculus was acquired by Facebook in March of 2014 for $2 billion. Zenimax has recently stated that they may seek a court injunction to halt the sale of Rift headsets due to the contentious nature of the origin.
Despite the jury not ruling in their favor, Oculus has put on an optimistic front. The company contended that the “heart of this case” was whether or not they had stolen Zenimax’s trade secrets and that the jury had found in their favor on that particular charge. They have also stated that they will be appealing today’s ruling.
Former Zenimax employee (and industry legend) John Carmack, Brendan Iribe, and Palmer Luckey were present in the courtroom after the verdict was read. Following the jury’s ruling, Carmack began reading over the judgment and Iribe and Luckey conversed quietly with their legal representation. Zenimax’s legal team discussed how they would move forward after the ruling.
It remains unclear how this ruling will impact the business side of the company. Facebook is slated to release their fourth-quarter earnings at the close of business today, and the Oculus Touch motion controllers (meant to act as a compliment to the Rift headset) were released for $199 in early December. Regardless of today’s judgement, Oculus’ intent to appeal means that this legal battle is far from over.
Regardless of today’s ruling, I can’t really see the sense in Zenimax trying to halt the sales of the Rift. While it is important to protect what they believe to be their technology and trade secrets, ultimately a stoppage in sales would harm Oculus’ ability to pay any compensation to them if juries rule in their favor after all of the appeals have been exhausted. Of course, that is operating on the assumption that Zenimax is out to make money and not to put Oculus out of business entirely. In any case, $500 million is far and away from $4 billion, and with appeals on the horizon, the possibility exists that Oculus may emerge from this legal battle unscathed.
What do you think about the $500 million judgment in favor of Zenimax in this particular case? Do you think that Zenimax will be able to halt the sale of Rift headsets? Does the size of this payout make you concerned about the future of the company and its hardware? Let us know in the comments below!