Facebook Must Pay $500 Million in Oculus Copyright Infringement Suit

Facebook's virtual-reality subsidiary and two of its founders have been hit them with a $500 million bill for violating the intellectual property rights of video-game maker ZeniMax Media. The verdict, which was reached Wednesday in a Dallas federal court, represents about one-fourth of the $2 billion that Facebook paid two years ago to buy Oculus, a developer of virtual-reality gear and software.

The jury concluded that Oculus and co-founders Palmer Luckey and Brendan Iribe violated the terms of a non-disclosure agreement. The jury also found Oculus liable on charges related to false designation and copyright infringement. Oculus vowed to appeal the decision.

ZeniMax, a video game publisher, sued the social network in 2014 in U.S. District Court in Dallas shortly after Facebook bought headset maker Oculus VR for $2 billion. In the lawsuit, ZeniMax alleged that a former employee, John Carmack, who later became Oculus VR’s chief technology officer, helped build his new employer’s device using knowledge he gained at ZeniMax.

"While we regret we had to litigate in order to vindicate our rights, it was necessary to take a stand against companies that engage in illegal activity in their desire to get control of new, valuable technology," ZeniMax said in a statement.

ZeniMax's lawsuit became higher profile last month when Facebook CEO Mark Zuckerberg, one of the world's richest men, came to testify. During his appearance, Zuckerberg denied that Oculus had stolen any of its technology from ZeniMax and revealed that buying Oculus cost Facebook more than just the initial $2 billion acquisition price. He said Facebook also agreed to pay $1 billion to retain and motivate Oculus workers.

The ZeniMax case could further raise the cost of the Oculus acquisition. Oculus is on the hook for $300 million in damages. Iribe is responsible for $150 million, and Luckey is saddled with the remaining $50 million.

In a statement, Oculus said it was pleased that the jury rejected allegations that it stole trade secrets from ZeniMax. The jury instead found violations of copyrights, trademark and contractual laws. Had Oculus lost on all the issues raised in ZeniMax's allegations, it could have been slapped with $2 billion in damages.

"Oculus products are built with Oculus technology," the company said. "Our commitment to the long-term success of VR remains the same, and the entire team will continue the work they've done since day one."