Oculus, a $2 billion acquisition that Mark Zuckerberg’s Facebook made almost three years ago, has landed the global giant in a huge mess now. A while ago, popular video game publisher ZeniMax, which is best known in the market as the owner of Fallout and Skyrim developer Bethesda Softworks, filed a lawsuit against Oculus accusing it of using copyrighted ZeniMax technology without permission.
In the lawsuit, ZeniMax had accused that Palmer Luckey, the co-founder of the company, stole trade secrets from ZeniMax to build the company’s signature product, the Oculus Rift. It also accused video game design legend and former employee, John Carmack, of stealing trade secrets. ZeniMax argued in the court that Luckey didn’t even have the skills and brains to design the Rift. The lawsuit was dragged on for quite a bit with shocking revelations and accusations being made by both the companies against each other. At one point, even Mark Zuckerberg was dragged into the case. One of the most shocking turning point in the case came when Carmack admitted to stealing code and documents from ZeniMax on his way out of the company.
Towards the end, the jury ruled that even though Oculus didn’t steal any trade secrets but its founders had surely violated a non-disclosure agreement and also was guilty of “false designation.” On the whole, Oculus is on the hook for a whopping $300 million, Luckey for $50 million, and co-founder Brendan Iribe is on the hook for $150 million.
Experts claim that even though the amounts of this judgement are most likely to be reduced on appeal, but trouble is still not over for Oculus.
ZeniMax is now seeking an injunction to block sales of any product that make uses of their technology. It is important to note here that the technology has already been widely distributed to developers who were working on several games for Oculus products, and notably the most popular Oculus Rift. If and when the injunction is granted by the court, it will result in limiting the games available for the Rift to only a few, which could really burn a huge hole in the sales of a company whose sales figure are already on a downwards trend.
Now the main question is, whether Oculus will be able to survive the $500 million judgment and the injunction if it is granted. The word in the market is that ZeniMax is putting its pressure on forcing a settlement and ending Oculus and its founders appeal process as early as possible. Whatever may be the case, the road ahead for Oculus doesn’t look so smooth either way.