Reality check: A woman puts on an Oculus virtual reality headset during preparations for a trade show in Los Angeles in 2014. Picture: REUTERS
Reality check: A woman puts on an Oculus virtual reality headset during preparations for a trade show in Los Angeles in 2014. Picture: REUTERS

Dallas — Facebook bet early on virtual reality, buying Oculus VR two-and-a-half years ago to get its groundbreaking headset.

Now it is fighting claims that the Oculus Rift was built with stolen technology and promoted with a false origin story about a young entrepreneur tinkering in his parents’ garage.

What started as a falling out between tech geeks is now a messy $2bn dispute that may drag Facebook co-founder Mark Zuckerberg onto the witness stand in a Dallas courtroom.

Facebook is accused of completing its acquisition of Oculus in 2014 with "full awareness" that the "holy grail" know-how behind one of Silicon Valley’s most promising consumer devices was misappropriated from another company.

ZeniMax Media is trying to show it did the heavy lifting to develop the software and hardware for the virtual reality goggles, alleging a star employee recruited by Oculus purloined its intellectual property.

Virtual Reality Boom

Facebook and the Oculus executives named in the lawsuit deny wrongdoing and say it is ZeniMax that is spinning revisionist history.

If ZeniMax is successful at a trial set to begin on Monday, it would rewrite the story of how Facebook emerged at the forefront of the virtual reality boom, with Microsoft, Sony, Alphabet’s Google and others competing for a piece of a market that is forecast to exceed $84bn in sales in 2020.

ZeniMax, a Maryland-based maker of interactive software and games, traces the roots of the fight to 2012. That was when John Carmack, one of its employees and the designer of blockbuster games such as Doom and Quake, began corresponding with Oculus founder Palmer Luckey.

Then a university-age gaming enthusiast living in southern California, Luckey was working on a "primitive virtual reality headset" he named the Rift.

At the time, it was "a crude prototype that lacked a head mount, virtual-reality specific software, integrated motion sensors and other critical features and capabilities needed to create a viable product", according to ZeniMax’s lawsuit.

Soured Relationship

ZeniMax contends Carmack was responsible for the breakthroughs that transformed the Rift into a "powerful immersive virtual reality experience".

But after Carmack and Luckey agreed to use the Rift to showcase a specially configured version of Doom 3 at a Los Angeles convention in 2012, relations between the start-ups soured, according to ZeniMax.

Instead of discussing how Oculus would compensate ZeniMax, Luckey and Oculus’s then CEO, Brendan Iribe, allegedly became "increasingly evasive and unco-operative". Next, they hired Carmack, who is accused of copying thousands of documents from his computer at ZeniMax.

To cover its tracks, Oculus "disseminated to the press the false and fanciful story that Luckey was the brilliant inventor of VR [virtual reality] technology who had developed that technology in his parents’ garage," according to a ZeniMax court filing.

ZeniMax is seeking $2bn in damages, which is about what Facebook paid to acquire Oculus in its bid to take virtual reality into the mainstream.

"We’re going to call many live witnesses, Mr Zuckerberg included," ZeniMax lawyer Tony Sammi said in an interview.

The defendants’ lead attorney, Beth Wilkinson, as well as Oculus and Facebook representatives, declined to comment.

Facebook Defence

In its defence, Facebook argued in an August 2015 filing — before many of the documents in the case were filed under seal — that ZeniMax had made no claim to own the technology and had asserted no intellectual property rights until Facebook had announced its intent to purchase Oculus in March 2014.

Carmack, who became chief technology officer of Oculus, said in a December court filing that his employment agreement at ZeniMax allowed him to be involved in Oculus because it was not a gaming company in competition with ZeniMax. He said ZeniMax consented to him publicly disclosing his virtual reality research.

Carmack says he also offered to manufacture and sell a consumer headset similar to Luckey’s, but his idea fell flat with ZeniMax CEO Robert Altman.

ZeniMax also declined to invest in Oculus in an early financing round and was unwilling to accept anything short of "a large nondilutable stake" in Oculus in return for allowing Carmack’s participation as a technical adviser, according to Carmack’s filing.

The trial is expected to last about three weeks.

Bloomberg

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