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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

#41

Post by modeless »

_m8fo wrote: post #9

Facebook bought Oculus for $3B [1] 16% of the purchase price for infringing on an NDA is pretty damaging. I believe that'll be a good deterrent in the future. [1] http://uk.businessinsider.com/facebook-actually-paid-3-billi... (thanks for the correction, Cozumuel)

A deterrent for what? What's the lesson here? If you're a student don't sign an NDA on the off chance you'll later found a company and get acquired by Facebook for $2B?

The real takeaway here is, if you have world-class tech guys working for you then don't support them, just tie them up in contracts, and when they leave and become successful you can sue them to get 25% of whatever they made, at zero risk to you.

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

#42

Post by 6stringmerc »

Very interesting result and shows the value of contracts. A lot of times people want to say, "Oh, that's just paperwork" and after years and years of Alphabet Soup Regulatory Agencies hovering over my RFP and business proposal work for clients, I have the utmost respect for signed documents and what they are there to enforce.

This isn't just finger-pointing accusations any more, this is a multi-hundred-million dollar verdict about a significant future market. Anybody who might consider pulling a similar stunt - and didn't learn from the public shitshow that was Cruise Automation's dirty laundry hung out in public - should be wise to study this case.

Disruption is fine and dandy overall, it's just that the Ends will also be measured by the Means in time.

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

#43

Post by gshulegaard »

LandoCalrissian wrote: post #40
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.

Yeah...but that breach was originally made during the original Kickstarter in 2012.

Aren't most statute of limitations for NDA breaches 3-4 years from original breach?

But even if it's still within the statute of limitations I can't help but get the feeling Zenimax is just trying to cash in on the unlikely success of Oculus.

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

#44

Post by aresant »

If the original complaint is to be believed(1) - which Juror's found credible -the course of events, tldr was something like this:

- Zenimax bought ID software for >$100m(1) on June 24, 2009.

- Carmack signed up with Zenimax for an earn-out / golden-handcuffs agreement that ended in June of 2013.

- Carmack was enthralled with VR.

- Carmack found Palmer via an internet forum, reached out to get a rift to try.

- Carmack tinkered with the Rift, adding sensors, building calibration, etc. while on the clock / using hardware from zenimax.

- Carmack brought a prototype of the Rift working on Doom 3 to E3 with him providing Oculus with their early press.

- Zenimax realized the extent to which Carmack was enabling Oculus and worked to negotiate equity with Brendan Iribe.

- Oculus sent Zenimax a proposal to discuss a partnership Sept 21, 2012 but never followed up / followed through.

- Carmack quit Zenimax the day his contract was up in June 2013, joined Oculus as CTO a few months later and took his 5 best guys with him.

- FB bought Oculus March 2014, Zenmix got pissed and sued.

Clearly it's Carmack's genius that made this viable.

It's Carmack's video that lent credibility to the campaign.

And it's Carmack's original IP (Doom) that made the demos compelling.

It may be a weird system that Zenimax is entitled to $500m but since Carmack was an employee, under contract with Zenimax - who had paid >$100m to buy him / his IP - it sounds like this was a fair verdict.

(1) https://www.scribd.com/document/274211118/Judge-denies-Faceb...

(2) http://www.gamespot.com/articles/zenimax-raised-105-million-...

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

#45

Post by elastic_church »

gshulegaard wrote: post #43
LandoCalrissian wrote: post #40

Earlier quoted context omitted.

It's the NDA that killed them.

Yeah...but that breach was originally made during the original Kickstarter in 2012. Aren't most statute of limitations for NDA breaches 3-4 years from original breach? But even if it's still within the statute of limitations I can't help but get the feeling Zenimax is just trying to cash in on the unlikely success of Oculus.

They sued in 2014 so the clock stops there.

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

#46

Post by doctorpangloss »

AmirS2 wrote: post #31
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,

In my personal opinion, whether or not Luckey violated the NDA is a little academic. Clearly, the $3 billion acquisition occurred on the reputation of John Carmack, who was poached.

I don't think you should charge $500 million for a poaching. That's the crux of my anticompetitiveness argument.

Nonetheless, you definitely shouldn't charge $500 million for merely violating an NDA, even if that's what the jury found.

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

#47

Post by elastic_church »

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.

> Sad to hear that they think a bunch of litigious assholes deserve $500 million for getting a signature on an NDA.

Wait, so if the guy actually abided by the contract he AGREED to, you know as a trustworthy reliable integritable individual, then Zenimax would have the first mover advantage and market lead on this burgeoning market. In this parallel reality that has nothing to do with their ability to execute.

They were deprived of that, in actual violation of an actual contract, and you find this aggregate decision of a jury sad?

You are kidding right?

Typically NDA's stipulate damages and punitive damages, as trade secrets are protected in the United States. The punitive damages are intended to deter someone from doing the same action again. Damages are calculated by extrapolating market value of secrets disclosed.

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

#48

Post by cpncrunch »

elastic_church wrote: post #45
gshulegaard wrote: post #43

Earlier quoted context omitted.

Yeah...but that breach was originally made during the original Kickstarter in 2012. Aren't most statute of limitations for NDA breaches 3-4 years from original breach? But even if it's still within the statute of limitations I can't help but get the feeling Zenimax is just trying to cash in on the unlikely success of Oculus.

They sued in 2014 so the clock stops there.

It looks like they sued in May 2014, and the acquisition closed in July 2014, so it looks like facebook just didn't do adequate due diligence.

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

#49

Post by elastic_church »

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?

> But still -- $500M is "not material" to their finances?

You just issue a few billion dollars worth of bonds in Europe, and all the investors are excited about getting exposure to a Silicon Valley company.

Don't have to pay them back for 10-30 years. So, basically not material.

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

#50

Post by jandrese »

elastic_church wrote: post #47
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.

> Sad to hear that they think a bunch of litigious assholes deserve $500 million for getting a signature on an NDA. Wait, so if the guy actually abided by the contract he AGREED to, you know as a trustworthy reliable integritable individual, then Zenimax would have the first mover advantage and market lead on this burgeoning market. In this parallel reality that has nothing to do with their ability to execute. They w…

I would be more sympathetic to Zenimax if they had shown any interest at all in VR. Remember Carmack left the company because he couldn't get any traction on VR, even after demoing goddamn DooM on it.

To show you just how much Zenimax cares, go and try to buy DooM VR for any platform.

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