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Facebook scoffed at $500m damages. Now Oculus faces nerd goggles injunction

Nice one, Sheryl

Sometimes it's wise not to boast that you're so rich, a $500m damages award against you is chump change.

Earlier this month, Facebook CTO Sheryl Sandberg scoffed at the paltry $500m damages it was ordered to award Zenimax Media for IP theft regarding its Oculus Rift nerd goggles. Sandberg said that the bill was "not material to [Facebook's] financials".

Clearly infuriated, the litigant ZeniMax is now seeking a permanent injunction to prevent Facebook selling Rift in the United States.

In its injunction, ZeniMax's lawyers write: "The jury's damage award here, however substantial, is an insufficient incentive for Defendants to cease infringing" – then cites Sandberg's unwise comment to CNBC News.

ZeniMax won the damages from a Texas jury earlier this month. The jury agreed that Oculus had violated an NDA and also infringed ZeniMax's copyright. It rejected a further claim that Oculus stole trade secrets, and the $500m was less than the $4bn ZeniMax demanded.

The legendary games developer John Carmack had worked for ZeniMax but subsequently joined Oculus as CTO in 2013. ZeniMax alleged that Carmack developed core technology for the Rift VR unit while at the games studio in "one of the biggest technology heists ever". Facebook paid $3bn for Oculus in 2014 – even more than reported at the time – plus an additional $1bn for retention and bonuses.

"The four founders of Oculus had no expertise or even backgrounds in VR – other than Palmer Luckey who could not code the software that was the key to solving the issues of VR," ZeniMax said after the verdict.

Ouch.

Facebook calls the verdict flawed and says it will ask for the injunction to be set aside. It has made the code available to other companies, but a Rift injunction would severely dent Rift's momentum.

The injunction is based on Oculus continuing to use the contested code.

"Defendants who infringe intellectual property rights cannot be heard to complain when a plaintiff seeks injunctive relief requiring that the infringer no longer infringe," the motion argues.

ZeniMax wants royalties for the use of the code, suggesting 10 years of 20 per cent of Oculus product revenue. But with the current demand, that might not be very much. Earlier this month Facebook closed half of the pop-up demo booths in Best Buy stores, some of which had "gone days" without a single punter wanting to give the cumbersome nerd goggles a try. ®

The motion can be read here [PDF].

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