Everyone hates lawsuits. They are nasty things that steal your peace of mind and leave you embroiled in the company of lawyers and circling the courts. They are even worse when you lose and need to pay out $500 million as a result. That is what happened with Oculus when a federal jury ordered it to pay half a billion dollars to ZeniMax. However, experts believe that despite the gargantuan sum, the specter of the case could continue haunting the VR industry for some time to come.
In case you haven’t been following the case, it stems from dealings between ZeniMax and Oculus, when the latter was still a startup under co-founder Palmer Luckey. In its filings, ZeniMax had said:
Oculus used ZeniMax’s hardware and software technology to create a software development kit for the Rift and to develop, modify, and tune the Rift hardware. Luckey did not have the expertise or knowledge to create a viable SDK for the Rift.
According to ZeniMax, the highly celebrated “Rift”, which forms an important part of Faceboook’s VR ensemble, was created by Palmer Luckey and a bunch of other people, who had “moving from ZeniMax to Oculus” in common. Palmer Luckey was also called out for breaching a non-disclosure agreement filed between his company and ZeniMax.
The jury did manage to find evidence of the latter and ordered Oculus to pay $500 million as a result. However, things are far from over. While Oculus is considering filing an appeal against the decision, ZeniMax in its turn is rumored to be planning an injunction against the sale of the headsets. Such an injunction if filed and accepted could impact not only Oculus, but also the VR industry as a whole.
An injunction may be considered by the courts because ZeniMax could argue that the exact scope of monetary damages would be impossible to arrive at here. And that could really have a serious impact on Oculus — and by extension, ZeniMax. For a company as large as Facebook, the $500 million sum is pretty insignificant if it can still continue using the tech involved without needing to enter licensing agreements with ZeniMax.
As Stephanie Llamas, vice president of product research and strategy at SuperData tells Polygon:
The general public is seeing two pioneers in tech, Facebook and ZeniMax, fighting over this little company no one had heard of until 2015. In the end, while $500 million is not a small sum of money, this was a big win for Facebook given that they can continue their work with Oculus and do not need to bring ZeniMax in on future revenues. And since it was disclosed that Facebook paid closer to $3 billion for the company, it is clear they believe this investment will earn them several times that, making $500 million even less consequential.
The threat of an injunction however — assuming that it is considered seriously by the judges — could well spark settlement talks between the companies.
The VR industry is still in its infancy and adoption rates while promising, are nowhere near on the path to steady growth or maturity. As such, anything that shakes the business industry or tampers with the adoption rate of the VR devices is harmful. The Oculus Vs ZeniMax case is far from being sorted out and unless the companies manage to reach a settlement, it might just leave a negative impact on the industry before everything is over.
