Oculus ordered to pay $500 million in ZeniMax lawsuit

Oculus has been ordered to pay half a billion dollars in a lawsuit with games company ZeniMax. According to Polygon, a jury awarded the sum after determining that Oculus executives violated a ZeniMax non-disclosure agreement in the early days of building the Oculus Rift VR headset. But it also decided that Oculus wasn’t guilty of misappropriating trade secrets, another of ZeniMax’s charges. Polygon writes that the $500 million award is composed of $200 million for NDA violation, plus $50 million for copyright infringement, a $50 million award against both Oculus and co-founder Palmer Luckey for false designation, and $150 million against former CEO Brendan Iribe for false designation. The overall award is less than the $4 billion that ZeniMax asked for, but it’s a substantial judgment against Oculus, and one that the company plans to appeal.

The lawsuit, which was filed in 2014, alleged that Oculus improperly used code from ZeniMax in order to build its Rift VR headset. ZeniMax is the parent company of id Software, whose co-founder John Carmack is currently CTO of Oculus. Luckey corresponded with Carmack — who was still at id — while developing the Rift headset prototype, and Oculus used id game Doom 3 to sell early backers on the headset.

Oculus is getting dinged for NDA and copyright violations, but not trade secret theft

But the complaint argued that Carmack did more than offer basic support. It alleged that software he developed at ZeniMax was key to making the Rift work, and that Oculus dodged attempts to establish a licensing deal. The complaint charged Oculus with violating the non-disclosure agreement that co-founders signed when dealing with ZeniMax, violating copyright by using ZeniMax games and code, and establishing false designation by confusing the public into believing that ZeniMax products were actually from Oculus.

For its part, Oculus claimed the suit was merely an attempt to profit off Oculus’ success, since it was filed shortly after the company’s multi-billion-dollar acquisition by Facebook. One of the trial’s central questions was whether Luckey had the technical expertise to make the Rift work without ZeniMax’s code. The complaint argued that he had created a barely functioning prototype that Carmack greatly refined — among other things, it said the Rift’s software development kit was adapted from ZeniMax technology. Oculus, meanwhile, defended Luckey’s reputation as a young genius with great technical aptitude.

In a statement, an Oculus spokesperson characterized the judgment as a limited victory. “The heart of this case was about whether Oculus stole ZeniMax's trade secrets, and the jury found decisively in our favor,” they said. “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, meanwhile, celebrated the decision. “Technology is the foundation of our business and we consider the theft of our intellectual property to be a serious matter. We appreciate the jury’s finding against the defendants, and the award of half a billion dollars in damages for those serious violations,” said CEO Robert Altman. But global communications director Tracey Thompson said that this wasn’t the end of the matter. “We will consider what further steps we need to take to ensure there will be no ongoing use of our misappropriated technology, including by seeking an injunction to restrain Oculus and Facebook from their ongoing use of computer code that the jury found infringed ZeniMax’s copyrights,” she said.

Update 3:55PM ET: Added more details about jury verdict and charges, and statement from Oculus.

Update 5:45PM ET: Added statement from ZeniMax.