Today, Mark Zuckerberg took the stand in Northern Texas District Court to defend Oculus against accusations of copyright violation and trade secret theft. The plaintiff is Zenimax Media, the parent company of id and Bethesda, which provided crucial support for many of Oculus’ first demos. Now, Zenimax claims that collaboration allowed Oculus to steal crucial intellectual property in the company’s formative early years.
On the stand, Zuckerberg described the charges as an attempt to cash in on Facebook’s $2 billion acquisition of Oculus, announced in 2014. “It is pretty common when you announce a big deal or do something that all kinds of people just kind of come out of the woodwork and claim that they own some portion of the deal,” Zuckerberg told the court, as reported in-court by The New York Times’ Mike Isaac.
“People just kind of come out of the woodwork.”
The dispute dates back to 2012, when Oculus was still a lucrative Kickstarter project rather than a full business. While the Rift was still in development, Palmer Luckey struck up a friendship with id’s John Carmack, now CTO of Oculus. According to the complaint, Carmack’s team at id did significant work to assemble a demo of Doom 3 on the Rift, building on Oculus’ existing hardware and id’s proprietary software tools. Luckey signed a non-disclosure agreement to work on the demo, which was ultimately presented privately at E3. Oculus promised some Kickstarter backers a copy of Doom 3 for the Rift, although no commercial agreement between Oculus and id existed at the time. The Kickstarter video also contained some gameplay footage and logos from Doom 3, although Luckey had been privately warned not to use any Zenimax-owned games in the video.
It’s difficult to say how much technology that demo shared with later incarnations of the Rift. Carmack has denied using any Zenimax code at Oculus, although it seems clear there were very few legal protections for the early partnership between the two companies. The complaint claims that in the months after E3, Zenimax sought out a formal partnership with Oculus. One deal proposed by Oculus would have given Zenimax a 5 percent stake in exchange for use of the developed software, marketing support, and $1.2 million in investment. Ultimately, the companies could not agree on terms, and talks quickly broke down. In the meantime, Oculus performed a number of non-Doom demos, including at CES in 2013. Carmack formally joined Oculus as CTO the following August.
“Theft of trade secrets and highly confidential information, including computer code”
Judging by timing alone, Zenimax’s lawsuit does seem to have come in reaction to Facebook’s acquisition announcement. Zenimax contacted Facebook with its concerns of IP theft just two weeks after the deal was announced, and the lawsuit was filed less than two months later. Still, Mark Zuckerberg’s testimony today seemed to suggest that he was unaware of the details of Zenimax’s charges until after the deal went through. In particular, Zuckerberg seems to have been unaware of Luckey’s non-disclosure agreement with Zenimax, which includes a clause forbidding him from using the proprietary information to gain a competitive advantage against the company.
It’s still difficult to say whether that conduct constitutes a violation of copyright and trade secret law, although there’s significant evidence yet to be discussed, including testimony from Luckey himself. Notably, the plaintiffs successfully ordered access to all of the phone and texting records from April 2012 to February 2014 for a number of players in the trial, including Carmack, Luckey, and Oculus co-founder Brendan Iribe, as well as a number of other Oculus employees. It’s still unclear how much was learned from the resulting records.
Reached by The Verge, Zenimax was confident that the coming testimony would vindicate the company’s claims. “ZeniMax and id Software welcome the opportunity to present substantial evidence of the Defendants' misappropriation of our Virtual Reality intellectual property,” Zenimax wrote in a statement. “That evidence includes the theft of trade secrets and highly confidential information, including computer code. ZeniMax will also present evidence of the Defendants' intentional destruction of evidence to cover up their wrongdoing.”
In a statement to the press, Oculus dismissed the allegations, writing, “we're disappointed that another company is using wasteful litigation to attempt to take credit for technology that it did not have the vision, expertise, or patience to build.”