Rift Reprieve: Judge Cuts $250 Million From Facebook's Debt to Zenimax

Big lawsuits between big companies often take years to play out, and Zenimax’s copyright infringement case against Facebook is one of those cases. On May 22, 2014, Zenimax filed a lawsuit against Oculus VR and its parent company, Facebook, Inc. for “unlawful exploitation of intellectual property,” which alleged that Oculus stole a piece of computer code that was integral in making the Rift headset function. Oculus issued a response the following month and declared that “there is not a line of ZeniMax code or any of its technology in any Oculus VR product."

In early 2017, the courts finally heard the arguments of both companies, and a jury sided with Zenimax. The company was seeking $4 billion in damages; the jury awarded it $200 million for breach of contract and $50 million for copyright infringement. The jury also awarded $250 million in damages, of which Palmer Luckey was on the hook for $50 million, and Brendan Iribe was required to pay $150 million.

Following Zenimax’s copyright win, the company went straight for the jugular by seeking to bar Oculus from selling the Rift and Gear VR headsets. Fortunately for Oculus, that idea was shot down by the courts. That wasn't the end of this legal battle, however, and Bloomberg reported that U.S. District Judge Ed Kinkeade in Dallas heard the case on Wednesday. Zenimax argued that “a permanent injunction is the only way to stop” Oculus’ copyright infringement. The judge agreed with Oculus that a sales ban would “place an unfair hardship.”

Judge Kinkeade also slashed the financial penalties in half. Facebook is still on the hook for $250 million for breach of contract and copyright infringement, plus $54 million for a year and a half of interest. Luckey and Iribe can let out a sigh of relief, though, because Kinkeade threw the $250 million in damages out the window.

Facebook is understandably pleased with the outcome, but the company isn’t giving up the fight. Bloomberg reported that Facebook VP and deputy counsel Paul Grewal indicated that the company would be “appealing the remaining claims.” Zenimax isn’t ready to back down either. The company announced that it would consider its next move, but also said it's pleased that the copyright infringement was upheld.