02 February 2017

Virtual reality lawsuit costs Facebook $500m

Facebook-owned virtual reality company Oculus has been ordered to pay out half a billion dollars to rival games company ZeniMax.

By Kathryn Higgins


The lawsuit between Oculus and ZeniMax centred on allegations that Oculus chief executive officer Palmer Luckey had violated a non-disclosure agreement and misappropriated ZeniMax code for the development of Oculus’ highly successful Rift headset product. While the damages awarded to ZeniMax are substantial, they are significantly less than the $2bn originally sought by the company based on claims that Oculus has misappropriated its intellectual property, which were eventually rejected by the jury. The final award against Oculus comprised of $200 for violating the non-disclosure agreement, $50m for copyright infringement and $50m for misuse of ZeniMax’s trademarks. Co-founders Mr Luckey and Brendan Iribe were also ordered to pay $50m and $150m respectively for improper trademark use.

Business as usual for Oculus

Despite the award, Oculus’ lawyers are counting the court’s verdict as a win. ‘The heart of this case was about whether Oculus stole ZeniMax's trade secrets, and the jury found decisively in our favor,’ an Oculus spokesperson 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.’ The scale of the fine is also unlikely to perturb Facebook, which acquired Oculus on 2014 just months before ZeniMax launched its legal action. The social media giant boasts more than $29bn on its balance sheet and recently announced a 51 per cent jump in fourth-quarter revenue.

Sources: Forbes; The Guardian

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