If the original complaint is to be believed(1) - which Juror's found credible -the course of events, tldr was something like this:<p>- Zenimax bought ID software for >$100m(1) on June 24, 2009.<p>- Carmack signed up with Zenimax for an earn-out / golden-handcuffs agreement that ended in June of 2013.<p>- Carmack was enthralled with VR.<p>- Carmack found Palmer via an internet forum, reached out to get a rift to try.<p>- Carmack tinkered with the Rift, adding sensors, building calibration, etc. while on the clock / using hardware from zenimax.<p>- Carmack brought a prototype of the Rift working on Doom 3 to E3 with him providing Oculus with their early press.<p>- Zenimax realized the extent to which Carmack was enabling Oculus and worked to negotiate equity with Brendan Iribe.<p>- Oculus sent Zenimax a proposal to discuss a partnership Sept 21, 2012 but never followed up / followed through.<p>- Carmack quit Zenimax the day his contract was up in June 2013, joined Oculus as CTO a few months later and took his 5 best guys with him.<p>- FB bought Oculus March 2014, Zenmix got pissed and sued.<p>Clearly it's Carmack's genius that made this viable.<p>It's Carmack's video that lent credibility to the campaign.<p>And it's Carmack's original IP (Doom) that made the demos compelling.<p>It may be a weird system that Zenimax is entitled to $500m but since Carmack was an employee, under contract with Zenimax - who had paid >$100m to buy him / his IP - it sounds like this was a fair verdict.<p>(1) <a href="https://www.scribd.com/document/274211118/Judge-denies-Facebook-motion" rel="nofollow">https://www.scribd.com/document/274211118/Judge-denies-Faceb...</a><p>(2) <a href="http://www.gamespot.com/articles/zenimax-raised-105-million-to-buy-id/1100-6213068/" rel="nofollow">http://www.gamespot.com/articles/zenimax-raised-105-million-...</a>
This is a very interesting part: [0]<p>>The liability of Defendants was established by uncontradicted evidence presented by ZeniMax, including (i) the breakthrough in VR technology occurred in March 2012 at id Software through the research efforts of our former employee John Carmack (work that ZeniMax owns) before we ever had contact with the other defendants; (ii) we shared this VR technology with the defendants under a non-disclosure agreement that expressly stated all the technology was owned by ZeniMax; (iii) the four founders of Oculus had no expertise or even backgrounds in VR—other than Palmer Luckey who could not code the software that was the key to solving the issues of VR; (iv) there was a documented stream of computer code and other technical assistance flowing from ZeniMax to Oculus over the next 6 months; (v) Oculus in writing acknowledged getting critical source code from ZeniMax; (vi) Carmack intentionally destroyed data on his computer after he got notice of this litigation and right after he researched on Google how to wipe a hard drive—and data on other Oculus computers and USB storage devices were similarly deleted (as determined by a court-appointed, independent expert in computer forensics); (vii) when he quit id Software, Carmack admitted he secretly downloaded and stole over 10,000 documents from ZeniMax on a USB storage device, as well as the entire source code to RAGE and the id tech® 5 engine —which Carmack uploaded to his Oculus computer; (viii) Carmack filed an affidavit which the court's expert said was false in denying the destruction of evidence; and (ix) Facebook's lawyers made representations to the court about those same Oculus computers which the court's expert said were inaccurate. Oculus’ response in this case that it didn’t use any code or other assistance it received from ZeniMax was not credible, and is contradicted by the testimony of Oculus programmers (who admitted cutting and pasting ZeniMax code into the Oculus SDK), as well as by expert testimony.<p>[0] <a href="http://www.polygon.com/2017/2/1/14478258/zenimax-oculus-injunction" rel="nofollow">http://www.polygon.com/2017/2/1/14478258/zenimax-oculus-inju...</a>
Large fines like these, even if the facts are clear, do not support competition and seem anti-consumer and anti-innovation. Either the fines should be smaller or the laws changed to better balance what concretely happened: a poaching of a key employee that led to the development of a big product.<p>That being said, Facebook doesn't really seem to have its R&D figured out. It's poisoned by bad leadership. Palmer Luckey managed to disgrace himself in public opinion in a way that seems hostile to recruiting the kind of progressive, free-thinking talent that makes up most R&D teams. John Carmack, besides his political leanings, speaks derisively of "Hollywood people" (Oculus users) and came out of this lawsuit looking like a real jerk chasing a huge check at any cost. At the end of the day, he betrayed a video game company.<p>Mark Zuckerberg has a lot of leadership faults disguised behind an amateurish ownership structure that puts him outside of public accountability. Despite its huge head start, Oculus is seriously threatened by HTC, Sony, Google and Samsung. Paper and Facebook payments didn't really go anywhere. Though Instagram and WhatsApp seem to be good acquisitions, even at their extraordinary prices, a broken clock can still be right twice a day. And it doesn't really take leadership to spend huge amounts of money on acquisitions—that's the easy way out. Outside of Facebook, his New Jersey schools efforts were not well regarded. Will his $3 billion commitment to a SF Biohub be marred by similar issues? I'm just nervous is all.<p>I think market sentiment will catch up with this ruling. Eventually someone's going to ask if he's the right guy to be in charge of Facebook. The public investor may never actually have the power to do something about it.
Very interesting result and shows the value of contracts. A lot of times people want to say, "Oh, that's just paperwork" and after years and years of Alphabet Soup Regulatory Agencies hovering over my RFP and business proposal work for clients, I have the utmost respect for signed documents and what they are there to enforce.<p>This isn't just finger-pointing accusations any more, this is a multi-hundred-million dollar verdict about a significant future market. Anybody who might consider pulling a similar stunt - and didn't learn from the public shitshow that was Cruise Automation's dirty laundry hung out in public - should be wise to study this case.<p>Disruption is fine and dandy overall, it's just that the Ends will also be measured by the Means in time.
This whole situation leaves me with a bad taste in my mouth regarding Zenimax.<p>So their biggest claim, surrounding Oculus being built on trade secrets, is found false but they get a half-billion dollar payout anyway?<p>Considering the purported fines could be traced back all the way to practically the original Kickstarter...I wonder if Zenimax would have gotten such a sum had Oculus not been bought by FB for $3B[1]...<p>...or am I misunderstanding something?<p>[1] <a href="http://www.businessinsider.com/facebook-actually-paid-3-billion-for-oculus-vr-2017-1?r=UK&IR=T" rel="nofollow">http://www.businessinsider.com/facebook-actually-paid-3-bill...</a>
<i>Facebook's Sheryl Sandberg told CNBC's Julia Boorstin that she was "disappointed in certain elements of the decision." Sandberg added she was "considering our options to appeal," and the verdict was "not material to our financials."</i><p>Sure, FB has a lot of money. But still -- $500M is "not material" to their finances?
> However, the jury also found Wednesday that Oculus didn’t violate any trade secrets. Instead, it ruled that Luckey, who was working as a contractor for Zenimax before starting the Kickstarter for the Oculus Rift headset, violated his non-disclosure agreement, according to a Polygon report.<p>I don't understand how this works. Why does Facebook have to pay $500M over an NDA violation between an individual and his previous company? It seems like ZeniMax should only have a case against Palmer Luckey.
Facebook bought Oculus for $3B [1]
16% of the purchase price for infringing on an NDA is pretty damaging.<p>I believe that'll be a good deterrent in the future.<p>[1] <a href="http://uk.businessinsider.com/facebook-actually-paid-3-billion-for-oculus-vr-2017-1" rel="nofollow">http://uk.businessinsider.com/facebook-actually-paid-3-billi...</a> (thanks for the correction, Cozumuel)
>John Carmack, Oculus chief technology officer and founder of a company owned by ZeniMax, improved on the device using his knowledge from his previous work as a ZeniMax employee.<p>That's a scary precedent...
For those interested, the official court document can be accessed here: <a href="https://www.scribd.com/document/274211118/Judge-denies-Facebook-motion" rel="nofollow">https://www.scribd.com/document/274211118/Judge-denies-Faceb...</a><p>It describes in details what happened.
The TechCrunch article describes ZeniMax's allegations at more length: <a href="https://techcrunch.com/2017/02/01/jury-awards-zenimax-500-million-in-oculus-vr-lawsuit/" rel="nofollow">https://techcrunch.com/2017/02/01/jury-awards-zenimax-500-mi...</a>
The accusation that Palmer was incapable of creating the Rift without Carmack's help and that he had a barely functional prototype, if true, is pretty insulting to Carmack. Carmack is a smart guy and I every much doubt he'd have joined on at CTO if the prototype was as awful as ZeniMax says it was.
> A Dallas, Texas jury today awarded half a billion dollars to ZeniMax after finding that Oculus co-founder Palmer Luckey, and by extension Oculus, failed to comply with a non-disclosure agreement he signed.<p>> In awarding ZeniMax $500 million, the jury also said that Oculus did not misappropriate trade secrets as contended by ZeniMax.<p>> Of the $500 million, Oculus is paying out $200 million for breaking the NDA and $50 million for copyright infringement. Oculus and Luckey each have to pay $50 million for false designation. And Iribe has to pay $150 million for the same, final count.<p><a href="http://www.polygon.com/2017/2/1/14474198/oculus-lawsuit-verdict" rel="nofollow">http://www.polygon.com/2017/2/1/14474198/oculus-lawsuit-verd...</a>
I wonder if this decision will be final, or if either party will appeal. Facebook has stated they will appeal, but Zenimax has threatened an injunction. While an injunction seems unlikely to achieve fruition, just the chance that it might (which would completely halt VR for Facebook) seems enough of a risk to just move on.<p><a href="http://uploadvr.com/verdict-zenimax-oculus/" rel="nofollow">http://uploadvr.com/verdict-zenimax-oculus/</a><p>Then again, what do I know about giant corporations suing each other. I've always found it comical how much money Samsung and Apple spent suing each other, but they seem to make money just fine.
Good to hear that the jury made the right decision on the ridiculous charges against Carmack. Sad to hear that they think a bunch of litigious assholes deserve $500 million for getting a signature on an NDA.
So fb will pay 300 mil and luckey and crew 200 mil.<p>I think its good for fb and bad for the others.<p>If fb had to pay all then that would've been bad for them.<p>How many units is occulus selling now?
John Carmack has to pay $150M. I know he's a very successful person but that has to be a lot of money for him. Is facebook going to pay that cash?
> ZeniMax isn’t a household name with most consumers, but the company’s subsidiaries have produced video games like “Quake,” “Fallout,” and “Wolfenstein.<p>So read the complaint in full, and it's a fair bit different to how it's reported in the OP. Article frames the situation in a pretty odd manner, almost implying ZeniMax by association had a hand in those titles. Also completely misses out the depth of prior association between Carmack and ZeniMax.