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Facebook Ordered to Pay $500M in Oculus Lawsuit

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Re: Facebook Ordered to Pay $500M in Oculus Lawsuit

#31

Post by AmirS2 »

doctorpangloss wrote: post #27

Large fines like these, even if the facts are clear, do not support competition and seem anti-consumer and anti-innovation. Either the fines should be smaller or the laws changed to better balance what concretely happened: a poaching of a key employee that led to the development of a big product. That being said, Facebook doesn't really seem to have its R&D figured out. It's poisoned by bad leadership. Palmer Luckey…

> what concretely happened: a poaching of a key employee

Not quite the reason for the fine according to TFA:

> Instead, it ruled that Luckey, who was working as a contractor for Zenimax before starting the Kickstarter for the Oculus Rift headset, violated his non-disclosure agreement,

Re: Facebook Ordered to Pay $500M in Oculus Lawsuit

#32

Post by psyc »

modeless wrote: post #22

Good to hear that the jury made the right decision on the ridiculous charges against Carmack. Sad to hear that they think a bunch of litigious assholes deserve $500 million for getting a signature on an NDA.

Zenimax, an investment vehicle for Providence Equity Partners, is literally run by actual lawyers. In the early days of Oculus, Carmack tried to get them interested in VR, and they wanted nothing to do with it. Now all of a sudden Oculus is a result of their tech.

They wouldn't even have the slimy case that they have, if not for the fact that Carmack and others used to work there. People can debate the legal technicalities all they want, but the plain, everyday explanation of what happened is that some lawyers figured out how to retroactively create and profit massively from a virtual non-compete that never existed.

Re: Facebook Ordered to Pay $500M in Oculus Lawsuit

#33

Post by modeless »

dvt wrote: post #25
modeless wrote: post #22

Good to hear that the jury made the right decision on the ridiculous charges against Carmack. Sad to hear that they think a bunch of litigious assholes deserve $500 million for getting a signature on an NDA.

Litigious or not, that's how intellectual property works. It's pretty clear that ZeniMax tried to reach some kind of agreement and no common ground was found.

It's clear there were negotiations. It's not clear how hard ZeniMax was trying. Based on how much support they gave Carmack it seems that they really wanted nothing to do with VR and that didn't change until they started smelling 2 billion Facebook dollars.

Re: Facebook Ordered to Pay $500M in Oculus Lawsuit

#34

Post by advisedwang »

hkmurakami wrote: post #20
kafkaesq wrote: post #16

Facebook's Sheryl Sandberg told CNBC's Julia Boorstin that she was "disappointed in certain elements of the decision." Sandberg added she was "considering our options to appeal," and the verdict was "not material to our financials." Sure, FB has a lot of money. But still -- $500M is "not material" to their finances?

Related: I believe you can take offset such a settlement from profits to reduce taxes. Never really understood the rationale for this. Seems pretty arbitrary and another example of how corporations are often favored over humans.

Imagine if you earned $1000 from activity X, paying $200 tax on it. Later X is found to be illegitimate and you have to pay $1000 damages and $500 punitive damages. Except because of the tax you have net lost $700 rather than the $500 punitive damages.

Put in another term, it would be like paying tax on money you never had.

Re: Facebook Ordered to Pay $500M in Oculus Lawsuit

#36

Post by gamblor956 »

kafkaesq wrote: post #16

Facebook's Sheryl Sandberg told CNBC's Julia Boorstin that she was "disappointed in certain elements of the decision." Sandberg added she was "considering our options to appeal," and the verdict was "not material to our financials." Sure, FB has a lot of money. But still -- $500M is "not material" to their finances?

There was a likely an indemnification clause in the acquisition agreement that indemnifies Facebook for this, meaning that the cost of this settlement comes out of Oculus and/or its former shareholders. (Alternatively they could have a clause that reduces earn-out payments or other contingent consideration.)

Consequently, the verdict would not be material to Facebook.

Re: Facebook Ordered to Pay $500M in Oculus Lawsuit

#37

Post by xadhominemx »

dvdcxn wrote: post #19

>John Carmack, Oculus chief technology officer and founder of a company owned by ZeniMax, improved on the device using his knowledge from his previous work as a ZeniMax employee. That's a scary precedent...

Fortunately, juries do not create precedent.

Re: Facebook Ordered to Pay $500M in Oculus Lawsuit

#38

Post by xadhominemx »

TAForObvReasons wrote: post #24
kafkaesq wrote: post #16

Facebook's Sheryl Sandberg told CNBC's Julia Boorstin that she was "disappointed in certain elements of the decision." Sandberg added she was "considering our options to appeal," and the verdict was "not material to our financials." Sure, FB has a lot of money. But still -- $500M is "not material" to their finances?

The company may have already reserved 500M for a potential resolution and took the hit in a previous quarter. This is typical of many companies, which is why you sometimes see stock prices rise after a legal settlement that comes in much lower than anticipated. For example, suppose they set aside 1B legal reserve for this case. That hit was already taken. Now they would reclaim 500M of that, which would be accretive.

That's not what "material" means. The reserve is non-cash.

Re: Facebook Ordered to Pay $500M in Oculus Lawsuit

#39

Post by [deleted] »

TAForObvReasons wrote: post #24
kafkaesq wrote: post #16

Facebook's Sheryl Sandberg told CNBC's Julia Boorstin that she was "disappointed in certain elements of the decision." Sandberg added she was "considering our options to appeal," and the verdict was "not material to our financials." Sure, FB has a lot of money. But still -- $500M is "not material" to their finances?

The company may have already reserved 500M for a potential resolution and took the hit in a previous quarter. This is typical of many companies, which is why you sometimes see stock prices rise after a legal settlement that comes in much lower than anticipated. For example, suppose they set aside 1B legal reserve for this case. That hit was already taken. Now they would reclaim 500M of that, which would be accretive.

[deleted]

Re: Facebook Ordered to Pay $500M in Oculus Lawsuit

#40

Post by LandoCalrissian »

gshulegaard wrote: post #30

This whole situation leaves me with a bad taste in my mouth regarding Zenimax. So their biggest claim, surrounding Oculus being built on trade secrets, is found false but they get a half-billion dollar payout anyway? Considering the purported fines could be traced back all the way to practically the original Kickstarter...I wonder if Zenimax would have gotten such a sum had Oculus not been bought by FB for $3B[1]...…

It's the NDA that killed them.
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