Facebook Ordered to Pay $500M in Oculus Lawsuit | Hacker News Reader

Facebook Ordered to Pay $500M in Oculus Lawsuit

variety.com

259 points_pius140 comments

If the original complaint is to be believed(1) - which Juror's found credible -the course of events, tldr was something like this:

- Zenimax bought ID software for >$100m(1) on June 24, 2009.

- Carmack signed up with Zenimax for an earn-out / golden-handcuffs agreement that ended in June of 2013.

- Carmack was enthralled with VR.

- Carmack found Palmer via an internet forum, reached out to get a rift to try.

- Carmack tinkered with the Rift, adding sensors, building calibration, etc. while on the clock / using hardware from zenimax.

- Carmack brought a prototype of the Rift working on Doom 3 to E3 with him providing Oculus with their early press.

- Zenimax realized the extent to which Carmack was enabling Oculus and worked to negotiate equity with Brendan Iribe.

- Oculus sent Zenimax a proposal to discuss a partnership Sept 21, 2012 but never followed up / followed through.

- 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.

- FB bought Oculus March 2014, Zenmix got pissed and sued.

Clearly it's Carmack's genius that made this viable.

It's Carmack's video that lent credibility to the campaign.

And it's Carmack's original IP (Doom) that made the demos compelling.

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.

(1) https://www.scribd.com/document/274211118/Judge-denies-Faceb...

(2) http://www.gamespot.com/articles/zenimax-raised-105-million-...

Seems fair to me as well. There's already postings dismissing any IP settlement as "unfair" here but that's fairly unrealistic in the real world. If IP can't be defended then that chills investor confidence. Why should I invest in company x if employees can leave with all the IP and go start company y?

Note this wasn't some submarine patent troll out of nowhere. This was a Zenimax employee working on another company's product on their time. This was also about NDA violations and a boatload of shady dealings by Facebook who famously bought Oculus over the weekend and left no time for a proper discovery of liabilities. There's little controversial about this. Carmack and Luckey were simply wrong and Oculus should have worked things out better with Zenimax. FB needs to do better due diligence. A lot of bad players were punished today. The VR industry is too young and fragile to have these shenanigans become the norm. Signaling to investors that VR IP is protected is a good for everyone.

What in the world was Carmack doing, working on another company's project, using your current company's time and resources? Don't get me wrong, the guy is a genius, and I love nearly everything he has a hand in, but you would think that with his level of seniority, some alarm bells would have gone off in his head.

I don't think Carmack works that way. All he really cares about professionally (I'm not talking about his personal life or rocketry) is doing good work and pushing his code to the limits of the field. Oculus hardware was a big coding challenge without much marked territory or set rules for Carmack, so that's probably the only thing he was thinking about while working.

If he does, he's come a long way from the John Carmack that consistently open-sourced his 3D engines and followed up with developers who failed to abide by the GPL [0].

(I don't think he works the way you describe at all).

[0] https://www.bluesnews.com/cgi-bin/finger.pl?id=1&time=200002...

Some alarm bells probably did go off, but they were probably silenced fairly quickly with something along the lines of, "but this is really cool and I want to work on it. Plus, it's not like my employer is actively working on a VR that I'd be competing with."

And at the end of the day, Carmack isn't the one who is out $500M, is he?

In retrospect, he came out smelling like roses.

He is personally out $150m, according to the article.

That seems like a lot, I didn't think he was worth that much, maybe I'm undervaluing his net worth. Is there a value for that anywhere?

Well, he had to stop playing with rockets as he was running out of FU money...

He presumably got a sizeable chunk of Oculus shares when he joined as CTO, and those would have been converted to a valuable amount of Facebook equity during the $3bn buyout.

Kind of irrelevant though, as the article is wrong, and it's actually Luckey and Iribe who are personally liable, and not Carmack.

The Variety article says Carmack but the TechCrunch article says Iribe. I'm having trouble finding the actual source.

The court documents say Iribe.

Carmack took his emails with him on a USB stick (which Zenimax's lawyer called "10,000 confidential documents") but the jury didn't award any damages for that.

There's a story in Masters of Doom where Carmack and Romero do just that. If I recall correctly, they would take company (Softdisk I believe) computers at night because they were more powerful than their home computers, and use them to develop their own games. I think they even worked on their own games on company time. I might be getting the details wrong on that one, but sounds like Carmack dgaf (or just doesn't think about how these things could potentially be wrong/misaligned).

LOVE THIS BOOK! And you are correct, they indeed "borrowed" the machines.

Carmack is way more of a badass punk than his demeanor makes him out to be. When he was 14, he got sentenced to a year in juvie for stealing his school's Apple IIs. He broke in using thermite. [0]

[0] https://en.wikipedia.org/wiki/John_Carmack#Early_life

I believe they settled it by paying some royalties on Commander Keen.

A lot of times Carmack just wants to get shit done. At Oculus he has worked on both the Minecraft code and the Netflix code both for VR clients, both (I believe, I know for sure for Minecraft at least from some talks) with MS and Netflix retaining full ownership of the code.

Maybe they have some "off the record" agreements to avoid anti-trust--Minecraft still hasn't officially come to Vive.

They also made a number of "free" games that were published by SoftDisk. This was all pre-modern software era though. If that happened today, it would end up very similarly to how the Occulus case ended up.

I love how it's assumed, taken as axiom, instead of absurdity, that it's even possible for a company to own a individual's time and mind by contract.

Believe me, I'm on your side about that. However, the reports stated he used company resources.

John was able to do the demo at E3 due to his employment at Zenimax, Carmack used company resources to work on the product, and Carmack was able to source talent from zenimax due to his employment at the company.

None of this has anything to do with Zenimax owning his "mind" or "time." It's about Carmack using company resources to enable Oculus. This becomes even more concerning when you consider that Carmack was one of their most senior, if not THE most senior engineer at the company. He's compensated handsomely under the assumption that any great ideas he has will end up with the company. This is similar to executive compensation strategies and carries with it very similar assumptions. The situation is a little more than some ordinary employee exploring their hobby and getting lucky.

This is like a CEO getting hired, being awarded a multi-hundred million dollar contract, not doing a single thing for the company that hired him, advertising for a competitor, leaving once his contract is up and also convincing numerous other executives to leave with him at the same time. That's extremely unethical in my opinion.

How much all that is worth is debatable, but the court seems to think it was worth $500M.

he enabled Zenimax's game to run on an oculus.

zenimax didn't have a VR headset to sell, or plans to make one

Imagine if this story was about carmack getting access to a playstation 4, and helping improve it and doing a demo of Doom on PS4.

that...is what he is supposed to do!

> Imagine if this story was about carmack getting access to a playstation 4, and helping improve it and doing a demo of Doom on PS4.

Your allegory is ending a bit too soon and missing some nuance: Imagine if this story was about carmack getting access to a Playstation 5 prototype, and helping improve it and doing a demo of Doom on PS 5. He then leaves Zenimax to work for Sony - on the PS 5

Yeah, people are forgetting that Carmack wasn't the janitor at Zeinmax; he was one of the biggest, if not THE biggest reason why Zeinmax acquired ID in the first place

that was the conclusion i jumped to, but i realized that this is not actually the case if i read the details right.

> What in the world was Carmack doing, working on another company's project, using your current company's time and resources?

The same thing he was doing when starting Id software working for another company a couple of decades ago.

Read the stories about how he wanted to work on the Occulus version of Minecraft, and how focused he was on making sure he could do that. There didn't appear to be much caution there, either.

What, like writing GLQuake for 3dfx cards?

He was a game programmer. He was porting his company's game to upcoming hardware. I fail to see what's even a tiny bit inappropriate about that.

Honestly, Carmack sounds like he is smitten with VR/Oculus, at least in the earlier videos.

I don't think he was treating this very rationally...it was like love

I feel like this timeline is missing somethings...like where does Palmer working as a contractor at Zenimax fit into here?

Also what about all the flippant allegations Zenimax was making about Luckey's technical expertise?

What about the allegations that the IP was from Zenimax proper?

Did the juror agree to all of the line items there?

No. The jury specifically rejected the claims of misappropriated trade secrets, which was the main thrust of Zenimax's argument.

The damages break down to $50M for copyright infringement, $200M for failing to comply with the NDA, and $250M for false designation.

While I personally believe they did break the NDA by showing the hardware with the demo Carmack cooked up, the amount of money awarded is beyond absurd.

"While I personally believe they did break the NDA by showing the hardware with the demo Carmack cooked up, the amount of money awarded is beyond absurd."

That all depends on if the demo was the deciding factor in the multi-billion dollar buyout.

"Clearly it's Carmack's genius that made this viable."

The HMD was functional before Carmack got involved. For example, Hunger in Los Angeles (https://news.usc.edu/32639/hunger-in-l-a-makes-its-mark-at-s...) used the PR4 prototype unit months BEFORE Carmack requested a version to try out. It had position tracking and optical pre-distortion at this time. So those concepts were around before Carmack was involved. As for code itself, Carmack implemented the pre-warp as a shader that projected the rectilinear image onto a surface (geometry). This approach was abandoned years ago and is now implemented with a pixel shader. The Hillcreast IMU Carmack wrote hard-coded support for (which you can look at in Doom BFG and see for yourself) was not even used for the final DK1, let alone later models. The used IMU was created by nrp as the 'adjacent reality' tracker, later hired by Oculus (and you can see the code for THAT tracker too, as both the DK1 and DK2 have had their source released on github).

Despite the first two development versions of the Rift having source available, Zenimax have yet to point to a single line of code as "ah-HAH! you copied this!".

Carmack's key work went into GearVR, not the Rift, where he worked with Samsung on the low-level changes to android (bypassing the Android compositor and USB stack, implementing racing-the-beam asynchronous timewarp).

>As for code itself, Carmack implemented the pre-warp as a shader that projected the rectilinear image onto a surface (geometry). This approach was abandoned years ago and is now implemented with a pixel shader.

Not that it matters for your point, but it was the other way around. They are using a mesh based pre-distortion now.

>Although the exact distortion parameters depend on the lens characteristics and eye position relative to the lens, the Oculus SDK takes care of all necessary calculations when generating the distortion mesh.

https://developer3.oculus.com/documentation/pcsdk/latest/con...

This is a very interesting part: [0]

>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.

[0] http://www.polygon.com/2017/2/1/14478258/zenimax-oculus-inju...

Wow... Very damn compelling and puts the $500m in perspective.

I always wonder when they are able to show someone made a particular Google search months after the fact, where are they pulling that data from? Surely the browser history is long gone...

Google cloud data is not exempt from discovery.

Companies monitor and log network traffic. Usually looking for inappropriate content, sometimes other things (like which employees are looking at job sites).

> 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);

Disappointing behavior right there.

Evidence destruction aside,

The idea of Zenimax preventing Carmack from accessing the id tech 5 source code is heartbreaking to me. That's like cutting out a part of someone's brain.

The free software third wave can't come soon enough.

Uh, then maybe Carmack shouldn't have sold id software to Zenimax? id software was a independent company, not beholden to any public shareholders so it was a conscious decision to sell to them for $$$.

After reading the details of the case i'm wondering why Facebook even took this to trial.

Would love to have been in the room when Facebook lawyers found out about Carmack deleting discovery material after receiving the claim and after Googling how to remove it safely.

That's a hall of fame level dumb criminal move.

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.

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.

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.

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.

> what concretely happened: a poaching of a key employee

Not quite the reason for the fine according to TFA:

> 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,

In my personal opinion, whether or not Luckey violated the NDA is a little academic. Clearly, the $3 billion acquisition occurred on the reputation of John Carmack, who was poached.

I don't think you should charge $500 million for a poaching. That's the crux of my anticompetitiveness argument.

Nonetheless, you definitely shouldn't charge $500 million for merely violating an NDA, even if that's what the jury found.

Offtopic but, why do people feel it's alright to refer to the article as The Fucking Article and on some other stuff they get all mad because someone used a curse word? The HN crowd is bipolar...

TFA stands for The Featured Article and always has, though I can understand your misapprehension because of RTFM which does use F as you suggest.

But remember to use fine if anybody important asks.

The "F" in RTFM stands for "First": http://uncyclopedia.wikia.com/wiki/RTFM

It is as if they are different people!

TFA has long history, and the OP should be right to use it without anyone getting hurt.

Thank you all for the downvotes for asking a serious question that was really bugging me. I even bet the ones who downvoted didn't even took the time to answer. Cheers!

Being hired to work on projects, using your companies time and money, and then taking that project to another company yourself, is stealing. Stealing is very anti-competative, and massively increases risk in investment. If anything, this case shows that you can steal a companies resources to make your own products, and if its a good idea then lawsuits are just a cost of doing business.

I don't know why you are being downvoted. When you are on company time or working on company resources, your output generally belongs to the company unless you have a special exemption. The cavalier attitude by many people in SV towards IP is somewhat tragic

> Large fines like these, even if the facts are clear, do not support competition and seem anti-consumer and anti-innovation.

Supporting competition or being pro-consumer / pro-innovation should not come at the cost of individual property rights, which is one of the cornerstones of wealth creation. I can agree with curtailing property rights in some extreme cases (eg. antitrust litigations or eminent domain), but I don't see any reason to do so in the case of Zenimax.

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.

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.

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.

So their biggest claim, surrounding Oculus being built on trade secrets, is found false but they get a half-billion dollar payout anyway?

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]...

...or am I misunderstanding something?

[1] http://www.businessinsider.com/facebook-actually-paid-3-bill...

It's the NDA that killed them.

Yeah...but that breach was originally made during the original Kickstarter in 2012.

Aren't most statute of limitations for NDA breaches 3-4 years from original breach?

But even if it's still within the statute of limitations I can't help but get the feeling Zenimax is just trying to cash in on the unlikely success of Oculus.

They sued in 2014 so the clock stops there.

It looks like they sued in May 2014, and the acquisition closed in July 2014, so it looks like facebook just didn't do adequate due diligence.

Having filed suit before the FB acquisition, I am a lot less perturbed.

But a lot of the negative posturing from ZeniMax during the case still rubs me the wrong way.

Or entirely possible they knew about it, dismissed it as "frivolous case" or factored it in the price paid.

Well, clearly it wasn't frivolous, so if they did think that then it would be evidence of them not doing proper due diligence.

I guess it's possible they just didn't care. What's another half billion dollars to facebook?

"It's a speeding ticket. Just pay it." -- paraphrasing Zuckerberg's lawyer in The Social Network

The interesting question is whether FB will indemnify Carmack. $150M is a hell of a speeding ticket.

It's not clear whether Carmack was actually the one to get that fine, sounds like it was Iribe.

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."

Sure, FB has a lot of money. But still -- $500M is "not material" to their finances?

Related: I believe you can take offset such a settlement from profits to reduce taxes. Never really understood the rationale for this. Seems pretty arbitrary and another example of how corporations are often favored over humans.

Imagine if you earned $1000 from activity X, paying $200 tax on it. Later X is found to be illegitimate and you have to pay $1000 damages and $500 punitive damages. Except because of the tax you have net lost $700 rather than the $500 punitive damages.

Put in another term, it would be like paying tax on money you never had.

What's to understand? When a company pays your salary or the rent for your office that also means less profit and therefore less taxes. But probably the company would be glad to pay less in salaries and rents even if that meant paying higher taxes.

The company may have already reserved 500M for a potential resolution and took the hit in a previous quarter. This is typical of many companies, which is why you sometimes see stock prices rise after a legal settlement that comes in much lower than anticipated.

For example, suppose they set aside 1B legal reserve for this case. That hit was already taken. Now they would reclaim 500M of that, which would be accretive.

That's not what "material" means. The reserve is non-cash.

There was a likely an indemnification clause in the acquisition agreement that indemnifies Facebook for this, meaning that the cost of this settlement comes out of Oculus and/or its former shareholders. (Alternatively they could have a clause that reduces earn-out payments or other contingent consideration.)

Consequently, the verdict would not be material to Facebook.

> But still -- $500M is "not material" to their finances?

You just issue a few billion dollars worth of bonds in Europe, and all the investors are excited about getting exposure to a Silicon Valley company.

Don't have to pay them back for 10-30 years. So, basically not material.

It's not material because they have the cash and it will not harm future cash flow. They also don't have to pay it all, Facebook is on the hook for $300m and the rest is from Luckey and Iribe.

Facebook just announced earnings this afternoon and banked $3.568b in profit for the quarter. That's 12x they'll pay even without any insurance. They have $29.45b in the bank so this is a 1% hit at worst, so as Sandberg said: not material to their finances. On top of that, as others have said they probably have already reserved the resources.

Most acquisitions will set aside 10-20% or more of funds into escrow to cover litigation and tax issues that occur, this isn't released for ~4 years after close (stat of limitations on tax returns). So chances are that FB is not paying much if any of the settlement amount and they don't have a big incentive to fight other than not setting a precedent of being easy to sue and win.

> 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.

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.

Because Oculus (now part of Facebook) was built on the NDA breach. (It is the court's opinion that) Luckey misappropriated trade secrets, formed that misappropriation into Oculus, and then sold that to FB. IANAL, but I suspect it's a 'receipt of stolen goods' argument - FB should have known through it's due diligence that what they were buying was stolen property.

TechCrunch says "Oculus pays $200M for NDA [breach of contract], $50M for false des[ignation], $50M for copyright [infringement], Luckey pays $50M false des, Iribe pays $150M false des" [1]

So it's more like FB/Oculus pay 300m, Luckey 50m, Iribe (former CEO) 150m. It looks like the judgement is against Oculus and their execs, which misrepresented what was sold to FB. It seems like they were found innocent of theft, which would have been more the more damaging charge going forward IMHO.

As it is, it's a big cash penalty and that's it; which could mean FB might choose to cut their losses and just pay, rather than risk going through an appeal.

[1] https://techcrunch.com/2017/02/01/jury-awards-zenimax-500-mi...

If Alice hires Bob, and Bob sells Alice's information to Charlie, and Charlie makes $2bn out of it, then it seems fair to hold Charlie responsible as well. Otherwise all you're doing is creating a market for sacrificial goats to take the fall while the company making the money gets away clean.

If Charlie doesn't know Bob's information is tainted, all you're doing is punishing the innocent for a crime they didn't commit.

It's called due diligence. The fact that Facebook didn't do it was a factor in the trial.

Facebook bought Oculus for $3B [1] 16% of the purchase price for infringing on an NDA is pretty damaging.

I believe that'll be a good deterrent in the future.

[1] http://uk.businessinsider.com/facebook-actually-paid-3-billi... (thanks for the correction, Cozumuel)

Zenimax wanted 15% of company. 16% one time payment is cheaper.

Nice to have a tax write-off too for FB. (Settlement sums can be offset against profits iirc)

Paying X will reduce profits by that amount and taxes by a much lower amount. I'm not sure FB will consider the whole thing nice. I mean, having to pay twice as much would't be twice as nice.

A deterrent for what? What's the lesson here? If you're a student don't sign an NDA on the off chance you'll later found a company and get acquired by Facebook for $2B?

The real takeaway here is, if you have world-class tech guys working for you then don't support them, just tie them up in contracts, and when they leave and become successful you can sue them to get 25% of whatever they made, at zero risk to you.

World-class tech guys should also respect contracts they sign. I respect his works and achievements, but I think his actions in this case were unfair. I only hope I don't know all details and my opinion is based on not all facts. I'd like to know my opinion is wrong.

if you have world-class tech guys working for you then don't support them, just tie them up in contracts, and when they leave and become successful you can sue them to get 25% of whatever they made, at zero risk to you.

He was free to not let id get bought out or to take a lower paying offering elsewhere.

>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.

That's a scary precedent...

Fortunately, juries do not create precedent.

Unfortunately, every piece of caselaw in the united states is the same, and has found the same.

IE This has been the law in every state forever.

Even the most liberal of states here, like california, find the same way, because they let employers claim things that "relate, at the time of conception or development, to the employers business, or the employers actual or demonstrable anticipated research or development".

Most engineers like to cut it off before the or, and like to believe their employer's business is very narrow.

Courts read both very broadly.

It's also an outrageous insinuation that John Carmack, the father of the FPS, needed "knowledge gained from Zenimax" in order to make Oculus happen.

I think you are undervaluing the codebase, if he used a codebase that was touched by 10 engineers with an average pay of 100k, the codebase cost 1 million to make in just one year, it would be hard for any engineer no matter how good to match the man hours of 10 engineers, Zenimax owned that knowledge and paid a high price for the value

Zenimax does not own anybody's knowledge. They own source code.

> It's also an outrageous insinuation that John Carmack, the father of the FPS, needed "knowledge gained from Zenimax" in order to make Oculus happen

He sold that knowledge to Zenimax for $100m and was on the clock. Perhaps he shouldn't have sold id Software if he wanted to freely use the IP. I'm reminded of those MySQL folk who cashed out to Sun/Oracle but still wanted to exploit on on the IP afterwards.

He did the work on company time. Thats a big no no. This is isn't some young kid, but a grown man.

He's surely salaried. How do you define company time in particular when there's no set you need to be here 9-5?

For those interested, the official court document can be accessed here: https://www.scribd.com/document/274211118/Judge-denies-Faceb...

It describes in details what happened.

Isn't that about the initial motion to dismiss from 2015?

It describes in detail the ZeniMax allegations.

> Though the Court uses definite language, the information is based on allegations only

I highly recommend it. It provides much more perspective and appears to be a strong case. The decisions - both in their favor and against - appear reasonable based on publicly available information.

The TechCrunch article describes ZeniMax's allegations at more length: https://techcrunch.com/2017/02/01/jury-awards-zenimax-500-mi...

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.

I don't think it was the prototype itself that was barely functioning, it was the software side that wasn't great. I remember when Palmer first showed off the device, it seemed to track just fine. When they introduced actual content, though, it became disorienting really quickly.

I backed them on Kickstarter so I got to see the DevKit1, DK2, and the CV1. The difference between the early versions and the end versions really came down to the software that handled the tracking. Compensating for movement lag and predicting frames to ease the jerkiness are really what converted it from a prototype to a viable commercial product.

That being said, it makes me laugh a little to see that Valve and the HTC Vive managed to outpace Oculus. Oculus had so much momentum and marketing buzz and they really dropped the ball on that one. Who knows how much of that was due to the FB purchase, but it definitely is weird seeing them lose their huge advantage.

Personally I have no interest in Oculus and it's equal parts Facebook and the vendor lock-in BS.

Oh, don't get me wrong. I'm never buying an Oculus product again, I'm just saying that I completely understand the accusation that the Rift was nothing without Carmack.

"That being said, it makes me laugh a little to see that Valve and the HTC Vive managed to outpace Oculus."

It was the other way around. Valve had been working in VR for years before the first oculus prototype. Oculus contacted Steam and copied the tech they had. The Steam guys actually helped Luckey because it was the small guy doing the open source thing.

They did not take into account the selloff to facebook of all this information.

I don't know how much stock I put into this. If you're going based off of what Yates said in that Reddit interview, I'd take that with a grain of salt. Palmer was working on a 3D head mounted display back in 2010/2011 and Valve has only admitted to VR research since 2012/2013. That's not to say that they couldn't have worked on it before then, but Palmer wasn't involved at that point. He also was only working on a 3D headset and wasn't initially planning on a VR headset from what I understand.

On top of that, Oculus definitely had more marketing/media buzz so they were ahead of Valve in the consumer mind. The end product might be closer to Valve's than to his original prototype, but he definitely had a small head start on them for the prototype and a huge head start from a marketing perspective. Valve all but shattered that.

Here's Palmer's first announcement in like 2012: http://www.mtbs3d.com/phpBB/viewtopic.php?f=140&t=14777

This is simply not true. Valve had precisely ZERO VR research up until 2012. Thats when they finally decided to pursue hardware and hired Jeri Ellsworth to build hardware division.

Oculus was working pretty closely with Valve for a fair while there. Is there any chance that this will come back to bite Valve now that this precedent has been established? It would be easy to claim that Valve gained some of their VR know-how from their partnership with Oculus.

I don't think anyone is insulting Carmack. Quite the opposite, pretty much everyone knows that Carmack is an absolutely brilliant, world-class developer. You could easily make the argument that Carmack saw the prototype and was more excited by its potential than its present quality that drove him to sign on. Then, being Carmack, he alone had the technical chops to make it usable.

> with Carmack having to pay another $150 million

His net worth seems to be only $40 million. What happens to him now?

Serve time at Zenimax. Or maybe it's not final decision.

This wasn't something I knew, but it appears that Carmack used to indirectly work for Zenimax, who became the parent company of id.

It wasn't indirect, by any means. Carmack was working on a VR version of Doom 3 (the BFG Edition) while working at id/ZeniMax before he jumped ship to go work at Facebook. There's still tons of remnant news stories about the Doom 3 BFG VR Edition that was supposed to launch with the CV1 Rift.

> 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.

> In awarding ZeniMax $500 million, the jury also said that Oculus did not misappropriate trade secrets as contended by ZeniMax.

> 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.

http://www.polygon.com/2017/2/1/14474198/oculus-lawsuit-verd...

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.

http://uploadvr.com/verdict-zenimax-oculus/

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.

Litigious or not, that's how intellectual property works. It's pretty clear that ZeniMax tried to reach some kind of agreement and no common ground was found.

It's clear there were negotiations. It's not clear how hard ZeniMax was trying. Based on how much support they gave Carmack it seems that they really wanted nothing to do with VR and that didn't change until they started smelling 2 billion Facebook dollars.

Zenimax, an investment vehicle for Providence Equity Partners, is literally run by actual lawyers. In the early days of Oculus, Carmack tried to get them interested in VR, and they wanted nothing to do with it. Now all of a sudden Oculus is a result of their tech.

They wouldn't even have the slimy case that they have, if not for the fact that Carmack and others used to work there. People can debate the legal technicalities all they want, but the plain, everyday explanation of what happened is that some lawyers figured out how to retroactively create and profit massively from a virtual non-compete that never existed.

Bingo. First person I found in this entire thread that knows what actually happened.

Hmm.. they still paid 100m to get carmack's previous company partly for his and others talent .. they had explicit NDA signed with oculus. carmack was working on their resources and IP(doom) on company time. Carmack was critical to success of occulus. The suit also predates Fb acquisition It is not their problem that Fb didn't do due diligence.

> Sad to hear that they think a bunch of litigious assholes deserve $500 million for getting a signature on an NDA.

Wait, so if the guy actually abided by the contract he AGREED to, you know as a trustworthy reliable integritable individual, then Zenimax would have the first mover advantage and market lead on this burgeoning market. In this parallel reality that has nothing to do with their ability to execute.

They were deprived of that, in actual violation of an actual contract, and you find this aggregate decision of a jury sad?

You are kidding right?

Typically NDA's stipulate damages and punitive damages, as trade secrets are protected in the United States. The punitive damages are intended to deter someone from doing the same action again. Damages are calculated by extrapolating market value of secrets disclosed.

I would be more sympathetic to Zenimax if they had shown any interest at all in VR. Remember Carmack left the company because he couldn't get any traction on VR, even after demoing goddamn DooM on it.

To show you just how much Zenimax cares, go and try to buy DooM VR for any platform.

Although this was the case when the lawsuit was filed, Zenimax has since promised more support for VR than many AAA game publishers, and they announced versions of Fallout 4 and DOOM for VR at their E3 press conference in 2016. Although you cannot buy Doom or Fallout VR now, they have shown both VR experiences (running on Vive at Gamescom and PAX), and are promising full VR support for Fallout 4 in the future.

> Zenimax would have the first mover advantage and market lead on this burgeoning market

Bullshit. Zenimax leadership wanted nothing to do with this market! First mover advantage is the opposite of how they work as a company. If it was up to them they would have had Carmack work on something less risky like the 10th installment in one of their IPs, and nothing would have happened.

So fb will pay 300 mil and luckey and crew 200 mil.

I think its good for fb and bad for the others.

If fb had to pay all then that would've been bad for them.

How many units is occulus selling now?

Can anyone find a copy of the NDA that was violated?

its under NDA

I honestly don't know if you are joking. I would appreciate seeing a source for that.

NDAs are under NDA more often than not

I think he probably meant that as a joke, and I would imagine that the contents of the NDA were part of the trial's discovery, however most NDA's I've been signing recently have included a clause that the NDA itself is confidential.

300m + 150m + 150m (Payout structure stated in the article) = 600m, not $500m.

> Luckey having to pay $150 million

What's the reasoning behind that?

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?

So when's the movie coming out?

Good to see that unethical behaviour has costs.

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

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.

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