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Oculus Cleared of Theft, But ZeniMax Awarded Due to NDA Breach

Although it decided that Oculus did not steal tech or secrets, the jury also ruled that Palmer Luckey did not uphold his NDA.

David Craddock

February 1, 2017 12:17 PM

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Drawing to a close weeks of heated testimonies and allegations, the jury assigned to the ZeniMax v. Oculus legal case ruled that Oculus VR did not misappropriate trade secrets or technology to build its Rift headset (via Upload VR).

However, the jury also reached a consensus that Oculus founder and Rift designer Palmer Luckey violated terms of a non-disclosure agreement—which means Oculus violated the NDA by extension.

The jury awarded ZeniMax $500 million as a result of the NDA violation. The money will be collected from different sources. Per Polygon, Oculus will pay $200 million for violating its NDA and another $50 million for copyright infringement; both Oculus and Palmer Luckey will pay $50 million each for false designation; and ex-Oculus CEO Brendan Iribe will pay $150 million for false designation.

Oculus plans to file an appeal, but for now the company's management is satisfied with what they view as the most important part of the jury's verdict. "The heart of this case was about whether Oculus stole ZeniMax's trade secrets, and the jury found decisively in our favor," said an Oculus spokesperson in a comment made to Polygon.

"We're obviously disappointed by a few other aspects of today's verdict, but we are undeterred," the spokesperson continued. "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."

Various representatives from ZeniMax have issued statements as well. "Technology is the foundation of our business and we consider the theft of our intellectual property to be a serious matter," said CEO Robert A. Altman. "We appreciate the jury’s finding against the defendants, and the award of half a billion dollars in damages for those serious violations."

A spokesperson for ZeniMax spelled out the company's next steps. "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."

In a lengthy statement, the spokesperson reiterated the company's assertion that, in effect, John Carmack made breakthroughs in VR tech while still at the ZeniMax-owned id Software;, and that a paper trail shows communications centered on that technology going from ZeniMax to Oculus before Carmack left. The full statement can be found below.

"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."

[Sources: Upload VR, Polygon]

David Craddock

Long Reads Editor

David L. Craddock writes fiction, nonfiction, and grocery lists. He is the author of the Stay Awhile and Listen series, and the Gairden Chronicles series of fantasy novels for young adults. Outside of writing, he enjoys playing Mario, Zelda, and Dark Souls games, and will be happy to discuss at length the myriad reasons why Dark Souls 2 is the best in the series. Follow him online at davidlcraddock.com and @davidlcraddock.