A Facebook Company Lost Half A Billion Dollars In A Nasty Court Battle

Senior Contributor
02.01.17

Oculus VR

Is the Oculus Rift really worth the billions Facebook paid for it? No sooner than Facebook squashed the dreams of tech fans everywhere by buying the virtual reality company for $2 billion than it immediately got embroiled in a nasty lawsuit with video game publisher ZeniMax. The suit officially wrapped up today, and Facebook lost, badly.

The crux of the argument was whether or not Palmer Luckey, the co-founder of the company, stole trade secrets from ZeniMax to build the company’s signature product, the Oculus Rift. ZeniMax accused Luckey and former employee, video game design legend John Carmack, of stealing trade secrets, to the point where ZeniMax argued in court that Luckey wasn’t smart enough to design the Rift. Even Mark Zuckerberg was dragged into the case, which was filled with uncomfortable revelations for both sides. Carmack, at one point, admitted to stealing code and documents from ZeniMax on the way out the door.

In the end, the jury ruled that Oculus didn’t steal any trade secrets. Unfortunately for Oculus, it did rule that the company and its founders had violated a non-disclosure agreement and also was guilty of “false designation,” which is more or less the jury saying that the Oculus Rift is a knock-off trying to pass itself off as the real thing. Oculus is on the hook for $300 million, Luckey for $50 million, and co-founder Brendan Iribe is on the hook for $150 million.

This is not good news for Oculus. The company’s success has already been somewhat questionable as executives dodge questions about just how many Rifts have actually sold. Third-party analysis has not been promising, either, and even those optimistic about the consumer end of things think the Rift, which needs a high-end gaming PC to work, is being left behind. While the amounts of this judgement will likely ultimately be reduced on appeal, that means the company has a long trial process ahead, and that even more money will have to go to lawyers while distracting it from trying to win the nascent VR market. ZeniMax is even considering an injunction to block sales of the Rift. But at least on the upside there won’t be any embarrassing magazine covers.

(via Kotaku)

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