Facebook and ZeniMax settle Oculus VR lawsuit

Finally bringing their extended legal battle over Oculus virtual reality technologies to a close, Facebook and ZeniMax confirmed today that they have settled their trade secret lawsuit for an undisclosed amount — a result that left them “pleased” and “fully satisfied,” respectively. First reported by CNBC, the settlement ends over four years of posturing and appeals that ensnared not only the companies but several of their key employees during the earliest days of VR commercialization.

Best known for its game studios Bethesda and id Software, ZeniMax claimed that former employee John Carmack had used copyrighted ZeniMax code to develop the Rift VR headset. It also said that Oculus founders Palmer Luckey and Brendan Iribe had misused ZeniMax trade secrets and trademarks in Oculus development and marketing, dragging all of the individuals into the lawsuit along with Oculus’ parent company, Facebook.

Though Carmack, Luckey, Iribe, and Facebook strongly disputed the accusations, ZeniMax won a $500 million jury verdict in February 2017, including damages for copyright infringement, violation of a non-disclosure agreement, and trademark claims. After a year-long appeal, a judge cut the verdict in half, removing damages for trademark claims and effectively letting Facebook’s employees off the hook.

The remaining $250 million judgment was based on copyright and trade secret violations, and it hung over Facebook for six months until today’s settlement, which came amid another appeal. Though the terms of the settlement aren’t public, they likely involved Facebook paying ZeniMax a further reduced amount in exchange for concluding the case.

Payday aside, there was little incentive for the companies to continue their fight, which initially seemed to be as much about star employee Carmack jumping ship and deep-pocketed Facebook buying Oculus as anything else. In recent years, ZeniMax’s Bethesda studio has released some of the most popular VR games, including Skyrim VR, Doom VFR, and Fallout 4 VR, all without Carmack’s involvement.

In a statement, ZeniMax CEO Robert Altman said that the company is “pleased that a settlement has been reached and are fully satisfied by the outcome.” Facebook said that it is pleased to be moving on, though most of its responsible employees have already done so: Luckey and Iribe both left Facebook for separate reasons before the case was settled. John Carmack, however, has remained at the company.