Facebook Loses Oculus Lawsuit, Ordered to
AP Photo/Manu Fernadez

Facebook’s virtual reality subsidiary Oculus and its executives have been ordered by a Dallas jury to pay game developer ZeniMax Media $500 million in damages over copyright infringement and the violation of a non-disclosure agreement.

The lawsuit stems from a two-year-old dispute between ZeniMax and Oculus, with ZeniMax alleging that Oculus CTO John Carmack and Oculus founder Palmer Luckey stole intellectual property to start the work on the Oculus Rift VR headset. The company also claimed that Facebook rushed through its acquisition process, not properly vetting Oculus and its executives for possible conflicts and other warning signs.

ZeniMax was seeking as much as $4 billion in the case. However, the jury threw out some claims, and primarily focused on the fact that Luckey and Carmack violated their non-disclosure agreements. The judgement requires Oculus to pay $300 million directly, with Carmack having to pay another $150 million and Luckey having to pay $150 million.

ZeniMax said in a statement that it was pleased with the verdict, but left the door open for additional legal proceedings: “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.”

Oculus on the other hand said that it was going to appeal the ruling, sending the following statement via email:

“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 had sued Oculus following the $2 billion acquisition of the company by Facebook in 2014. The court proceedings, which began in January, included testimony from Facebook CEO Mark Zuckerberg as well as Luckey and Carmack.

ZeniMax isn’t a household name with most consumers, but the company’s subsidiaries have produced video games like “Quake,” “Fallout,” and “Wolfenstein.”

Facebook didn’t immediately respond to a request for comment. The company is set to announce its Q4 2016 earnings after market close Wednesday. Investors didn’t seem too rattled by the verdict, with Facebook’s stock essentially remaining flat after the news broke.

Update: 2:48pm: This post was updated throughout with additional details on the judgement and statements from both companies.

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