Jury Orders Facebook to Pay $500 Million for VR Headset

DALLAS (CN) — A federal jury Wednesday concluded that Facebook’s Oculus VR subsidiary did not steal trade secrets from ZeniMax for its Rift virtual reality headset, but still ordered Oculus to pay $500 million for breach of contract and trademark and copyright infringements.

ZeniMax, of Rockville, Md., asked for $4 billion in damages during closing arguments last week. ZeniMax and its subsidiary id Software, of Richardson, Texas, sued Oculus and its founder Palmer Luckey in May 2013, two months after Oculus was purchased by Facebook for $2 billion.

ZeniMax claims Oculus and Luckey violated a nondisclosure agreement for creation of the Rift headset and that Luckey relied on the help of id Software employees during Rift’s development.

The jury found insufficient evidence that the defendants misappropriated trade secrets. But it also found that Oculus did “directly infringe” the plaintiffs’ copyrights and that Luckey violated a nondisclosure agreement.

ZeniMax said it was “pleased” by the jury 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,” ZeniMax said in a statement.

Oculus said it looks forward to appealing, “and eventually putting this litigation behind us.”

“The heart of this case was about whether Oculus stole ZeniMax’s trade secrets, and the jury found decisively in our favor,” Oculus said in a statement Wednesday.

“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.”

During the three-week trial, Facebook CEO Mark Zuckerberg testified that the purchase price was closer to $3 billion due to additional payments to keep workers, and that the owners valued the company at $4 billion.

Luckey was under fire on direct examination, hit with suggestions that he was just a hobbyist tinkering in his garage and lacked the ability to develop Rift on his own.

Luckey testified that when he demonstrated his headset to investors in 2014, he executed the plaintiffs’ code through the headset but did not take the source code itself.