Tech Law

Luckey Dons Virtual Flak Jacket for Zenimax Testimony

Young Jedi Palmer Luckey came in from the political cold on Wednesday to deny that he stole proprietary code from ZeniMax Media, in the little-known company’s blockbuster US$2 billion lawsuit against Oculus VR and its overlord Facebook.

ZeniMax has alleged that in 2012, when Luckey was just a video game enthusiast in southern California, he corresponded with John Carmack, the iconic former ZeniMax programmer behind Doom, who was then technical director of its Id Software unit. Carmack used proprietary hardware and software information to develop the Oculus Rift virtual reality headset, according to the lawsuit ZeniMax filed in U.S. District Court in Dallas.

ZeniMax spent millions of dollars to develop its proprietary technology in virtual reality and immersive technologies, according to the complaint, which argues that Luckey lacked the expertise to develop the virtual reality headset on his own.

Carmack left ZeniMax in 2013 to become chief technology officer at Oculus. Prior to his departure, he illegally downloaded thousands of proprietary documents that he took with him to the new company, the suit alleges.

A year later, Facebook announced a $2 billion cash and stock deal to acquire Oculus.

Keeping a Low Profile

Luckey for the most part has been incommunicado since last fall, following publication of areport that he secretly helped fund Nimble America, an Internet group dedicated to “sh*tposting” memes designed to malign Hillary Clinton. Luckey apologized on his Facebook page following the disclosure.

ZeniMax attorneys on Wednesday did their best to knock boy wonder Luckey off his perch, according to reports, pointing out that he lacked the expertise to develop sophisticated virtual reality technology on his own.

Facebook CEO Mark Zuckerberg, swapping out his casual hoodie for a suit and tie, on Tuesday testified that he never even heard of ZeniMax. He also disclosed that his company actually paid about $3 billion for Oculus, a figure that included incentives to retain workers and meet targets.

“We’re eager to present our case in court,” Oculus said in a statement provided to TechNewsWorld by spokesperson Matt Steinfeld.

“Oculus and its founders have invested a wealth of time and money in VR because we believe it can fundamentally transform the way people interact and communicate,” the company added. “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.”

Legal Fallout

The ability to prove an intellectual property case such as this one often comes down to specific evidence — like emails, documents and eyewitness testimony, noted Paul Teich, principal analyst at Tirias Research.

“This is one of those low probability, but high impact events our industry dreads,” he told TechNewsWorld. “If ZeniMax can prove that their trade secret was divulged in good faith and then used by others who were not supposed to have access, then they probably have a case to extract damages from the parties exactly involved.”

The damage to Facebook might be limited if there were no way for Facebook to know about the trade secret, Teich added.

“I don’t think Zenimax will be able to enforce licensing on any other companies in the industry,” he said.

This case is unlikely to do any long-term damage to Facebook, said Lewis Ward, research director for gaming and VR/AR at IDC, though he conceded that he’s not familiar with the details of the litigation.

“Any way you cut it” he told TechNewsWorld, “the costs associated with this case will be dwarfed by the billions of dollars Facebook has already invested in Rift and will pour into the system over the next five years to make it conform to Facebook’s vision.”

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.

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