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Catch Up on the Explosive $2 Billion Lawsuit Against Facebook Before Zuck Takes the Stand

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Facebook CEO Mark Zuckerberg has said he wants to escape the Silicon Valley bubble and travel to different parts of America as part of his 2017 New Year’s resolution. It looks like the first stop on his journey will be a Northern District of Texas Federal courtroom.

Zuckerberg, Oculus VR founder Palmer Luckey, and former Oculus CEO Brendan Iribe will testify this week in a $2 billion dollar lawsuit brought by ZeniMax Media, the owners of video game developers Bethesda Softworks and id Software, against Oculus VR. Facebook bought Oculus for $2 billion in 2014.


ZeniMax alleges that Oculus stole trade secrets, in part when former senior ZeniMax employee John Carmack left ZeniMax and joined Oculus as chief technical officer. Zenimax also alleges Oculus infringed on its copyrights and that Luckey violated a non-disclosure agreement he signed with ZeniMax in 2014. Toni Sammi, a lawyer for ZeniMax, called it “one of the biggest technology heists ever,” when he presented oral arguments on Tuesday. ZeniMax is seeking $2 billion in damages. Luckey has long been credited as the Rift’s creator, but ZeniMax alleges that the supposedly groundbreaking VR software Carmack worked on at id was reimplemented when he joined Oculus. ZeniMax has tried to prove this by pointing to a video interview where Carmack shows off a functioning virtual reality headset before he had ever met or collaborated with Luckey.

Facebook has rejected ZeniMax’s claims, calling its story a fantasy. Facebook contends that ZeniMax is suing because the company passed on a proposed partnership and investment opportunity with Oculus before it had been acquired by Facebook. Initially, Oculus offered 2 percent of its company to Zenimax, and later offered 15 percent. The deal was that Oculus could build virtual reality hardware and ZeniMax could handle software and content, like games. ZeniMax passed on both offers. “This case, because ZeniMax and the owners of ZeniMax feel badly, embarrassed, humiliated, that they didn’t do the deal, that they didn’t invest in this VR technology when they could have, they want to rewrite history,“ Beth Wilkinson, a lawyer for Facebook said last week during the company’s opening argument.


This case has a long history. In 2014, right after Mark Zuckerberg publicly announced his plans to acquire Oculus, ZeniMax filed its lawsuit only against Oculus, and warned Facebook of the potential legal problems associated with acquiring the company. ZeniMax alleges that Zuckerberg quickly pushed through with the deal, and that Facebook didn’t preform adequate due diligence, ignoring a letter sent by ZeniMax threatening litigation.

While he was questioned by ZeniMax’s lawyer last week, Carmack admitted to taking thousands of documents and lines of code. “I copied files that I shouldn’t have. I think stealing is an uncharitable way to look at it since I didn’t benefit and ZeniMax didn’t lose, but I shouldn’t have done it, and I did,” Carmack said while being questioned by ZeniMax’s lawyer. In testimony, Carmack was eager to talk about the documents he took, and explained that “by the strict intellectual property definition” his copying of documents was considered stealing. Carmack argued that the emails he copied didn’t contain source code, rather just snippets of source code, but, Carmack said, there may have been source code included in the attachments of the emails.

In its opening argument, ZeniMax presented some of Zuckerberg’s emails that it obtained through discovery, including emails sent from fellow Silicon Valley billionaire, Oculus investor and fellow Facebook board member Marc Andreessen to Zuckerberg. “Blew my brain wide open,” Andreessen wrote to Zuck in 2014 regarding Oculus. “The key seems to be that they have added John Carmack, co-founder of id, co-creator of Doom and Quake, and essentially the inventor of 3D computer games and one of the all time great hackers as CTO.”

ZeniMax also alleged in its argument that Carmack helped select employees for Oculus to poach from id Software. ZeniMax presented an email written by Carmack in 2014, after he had joined Oculus, that lists four id Software employees, including at least two engineers.


The trial resumes Tuesday in Dallas, and Zuckerberg will be the first person called to take the stand. Luckey and Iribe will follow. It’ll be Palmer Luckey’s first public appearance since the Daily Beast revealed his funding and involvement with Nimble America, a pro-Trump political organization that utilized memes. (RIP Palmer Watch) It’s unclear if Zuck will be sporting his classic grey shirt and blue jeans, but we will be reporting from the trial and will provide an update.