Oculus, a virtual reality headset maker that got its start in Irvine, was ordered Wednesday to pay $500 million in damages to ZeniMax Media, which claimed the startup stole its technology.
The company, founded in 2012 and bought by Facebook in 2014 for $2 billion, faced a jury trial in a Dallas federal court. Jurors on Wednesday sided with ZeniMax in its lawsuit over the Oculus Rift, the headset that put the social media giant at the forefront of the VR boom.
The verdict is a rebuke of Facebook Chief Executive Officer Mark Zuckerberg, who isn’t a defendant but who told jurors in his first-ever courtroom testimony that it was important for him to be there because the claims by ZeniMax were “false.”
Oculus was formed by Luckey Palmer and Brendan Iribe. Palmer, the story went, cobbled a duct-taped prototype headset while living in a trailer parked in his parent’s Long Beach driveway. Iribe met with the 19-year-old before investing in the concept, becoming chief executive of the new tech firm. The company established its headquarters on MacArthur Boulevard near John Wayne Airport.
In 2013, Oculus lured John Carmack, a renowned game designer, away from ZeniMax and named him chief technology officer. This move by Carmack would become the central point in ZeniMax’s lawsuit.
ZeniMax claimed it was responsible for key breakthroughs in the development of software and hardware for the headset, only to be betrayed when Carmack joined with Luckey and Iribe and purloined ZeniMax’s intellectual property for their own startup.
While the jury rejected trade-secret theft claims, it Wipbet awarded $200 million in damages against Oculus for violating a non-disclosure agreement, $50 million for copyright infringement and $50 million for improper use of ZeniMax’s trademarks. Jurors also hit Oculus’s co-founders, Brendan Iribe and Palmer Luckey, with $150 million and $50 million in damages, respectively, for the trademark misuse. The jury found that Carmack took property belonging to ZeniMax but awarded no damages against him.
Oculus heist
ZeniMax’s lawyer, Tony Sammi, argued at trial that Oculus committed a “heist,” covered it up by destroying evidence and made off with “a lot of money” when it was bought out by Facebook. He told the jury Oculus went from “zero to hero” using Carmack’s innovations at ZeniMax to improve on the crude prototype for the Rift designed by Oculus co-founder Palmer Luckey.
“If they could make it, why’d they take it?” Sammi asked the nine-member jury in his closing argument.
Zuckerberg testified for five hours during the three-week trial, denying ZeniMax’s allegations and saying it’s common for companies to “come out of the woodwork” and make such claims following an acquisition.
Facebook’s lawyer, Beth Wilkinson, underscored that point in her closing argument, saying ZeniMax ceased all work on virtual reality in early 2013 and didn’t accuse Oculus of wrongdoing until Facebook announced the take-over in March 2014.
“They’re jealous. They’re angry,” Wilkinson told jurors. “They’re embarrassed because they had the opportunity to get in on this.”
Zuckerberg had a vision and followed through on it, she said. He “saw what these guys could do in the future and invested,” she said.
ZeniMax had sought $2 billion from Facebook and Oculus to compensate losses and unspecified punitive damages.
Attorneys on both sides declined to comment on the verdict as they left the courtroom. An Oculus representative couldn’t immediately be reached for comment.
Register staff writer Hannah Madans contributed to this report.
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