Jury awards $500 million to ZeniMax in lawsuit against Oculus VR [Updated]

The lawsuit between ZeniMax and Oculus VR has ended very badly for Oculus: Polygon reports that a jury has found that Oculus co-founder Palmer Luckey violated his non-disclosure agreement with ZeniMax, and has awarded ZeniMax $500 million as a result. 

The case revolved around two major points: The non-disclosure agreement signed by Luckey prior to beginning work with ZeniMax, which prohibited Oculus from using or sharing ZeniMax trade secrets, and alleged theft of documents and a proprietary development tool by John Carmack, formerly of Bethesda-owned id Software and now the CTO at Oculus VR.   

Interestingly, while the jury found that Luckey broke the NDA, it determined that Oculus did not misappropriate ZeniMax trade secrets. In that light, the penalty seems surprisingly heavy, although final details of the judgment have yet to be made public—and it will almost certainly be appealed. But it could have been worse: ZeniMax was seeking $4 billion in the suit. 

Oculus was ordered to pay $200 million for breaking the NDA , $50 million for copyright infringement, and $50 million for false designation, according to the report. Oculus co-founder and former CEO Brendan Iribe was ordered to pay $150 million for false designation, while Luckey must pay $50 million. 

Update: Oculus VR has released the following statement in response to the verdict: "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, naturally, said that it is pleased with the ruling and the award. "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 company said in a statement. 

"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."

“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," ZeniMax Chairman and CEO Robert Altman added. "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."

The judgment is huge, but so too is the threat of an injunction: If one is granted, it could put a halt to Oculus Rift sales until the underlying code is overhauled. 

Andy Chalk

Andy has been gaming on PCs from the very beginning, starting as a youngster with text adventures and primitive action games on a cassette-based TRS80. From there he graduated to the glory days of Sierra Online adventures and Microprose sims, ran a local BBS, learned how to build PCs, and developed a longstanding love of RPGs, immersive sims, and shooters. He began writing videogame news in 2007 for The Escapist and somehow managed to avoid getting fired until 2014, when he joined the storied ranks of PC Gamer. He covers all aspects of the industry, from new game announcements and patch notes to legal disputes, Twitch beefs, esports, and Henry Cavill. Lots of Henry Cavill.