Kyle Orlando
Earlier this year, ZeniMax won a $500 million verdict against Facebook-owned Oculus and many of its executives for copyright infringement, mislabelling, and NDA violation (edit: an earlier version of this story mischaracterized the verdict) . That wasn’t the end of Oculus’ legal troubles, though. The company is now opposing a proposed injunction to ban the sale of hardware or software “derived” from ZeniMax’s technology or to enforce a 10-year 20 percent royalty on that hardware from ZeniMax.
US District Judge Ed Kinkeade of the Southern District of Texas heard the arguments in that injunction case Tuesday, and he also addressed a ZeniMax petition for an additional $500 million in false damages and attorney fees. In court files, ZeniMax states that “the jury verdict clearly shows that Oculus mistakenly obtained ZeniMax VR technology under the NDA and used it… to create a company that would not have existed without ZeniMax.”
While Oculus’ sale to Facebook”[made] tycoons from the individual defendants,” writes ZeniMax, the company “never received a dime for its investment in this revolutionary technology — although it was ZeniMax that proved its worth to the world long before defendants ever came.” refers to specific language in the Oculus/ZeniMax NDA stating that a warrant would be demanded if that agreement is broken.
The $500 million in damages already awarded by a jury is “inadequate remedy for ongoing damages,” ZeniMax argues, because that amount “is not enough incentive for defendants to stop infringements.” To argue this, the company cites Facebook COO Sheryl Sandberg, who said in an interview that the jury award “doesn’t belong to [Facebook’s] finances.”
Oculus replies back
In its own court files in response to the prohibition move, Oculus states that “ZeniMax cannot demonstrate that it has suffered lasting damage” from Oculus’ actions. Rather, Oculus argues that the trial showed that ZeniMax would likely suffer “zero” financial losses in the future as a result of Oculus’ NDA breaches, which it says occurred years ago and is not ongoing. “ZeniMax does not offer products that compete with Oculus’ virtual reality platforms and headsets,” the company emphasizes.
Any ban on Oculus hardware would “impose undue hardship on Oculus,” the company said, and even “damage the public interest” by turning Zenimax “upside down and leveraging it in future license negotiations.” In any case, Oculus writes, ZeniMax has provided no evidence that the company current source code continues to infringe early code that a jury ruled infringed ZeniMax’s copyright.
Oculus says that rewriting the entire Oculus codebase, as ZeniMax demands, would be a “long, cumbersome, and costly” process that requires “cleanroom engineers to make numerous changes, not only to the code snippets ZeniMax presented during the trial period, but to numerous other segments of interrelated and interdependent code.” That process would not have been necessary if Zenimax had asserted its rights in a more timely manner, Oculus writes.
In addition to disproving the proposed ban, Oculus also argued in court that the entire jury verdict should be thrown out. In arguments, an Oculus attorney argued that there is “not a shred of evidence” that ZeniMax actually lost sales or suffered financial damage as a result of Oculus’ actions. The jury award amounted to mere speculation about lost future earnings unsupported by the evidence, he argued, according to a Law360 summary of the hearing (subscription required). In addition, Oculus is seeking damages from ZeniMax for not disclosing important information about ZeniMax’s valuation that had to be produced in the process.
Judge Kinkeade asked Zenimax to be “more specific” in which parts of the current Oculus code infringe Zenimax’s copyright, according to the Law360 report. Although the judge did not rule after the hearing, he urged both parties to reach a settlement rather than risk a major decision that he said could come hard on both sides rather than “the baby.” to split”. The judge said he would probably solve “the heck out of” [this] big, hairy fight” sooner rather than later, according to Law360. So if there’s no settlement, we expect a ruling could come any day.