ZeniMax Media, Inc. (“ZeniMax”) is a company that develops and publishes video games. These games include Fallout and Elder Scrolls. ZeniMax publishes the video games through its subsidiaries and has found widespread success in the gaming market. With that widespread success, ZeniMax was able to allocate funds for the development of virtual reality gaming.
In April 2012, a ZeniMax employee started communicating with Palmer Luckey. At the time, Luckey was a college student working on a virtual reality headset prototype named Rift. The ZeniMax employee took interest in Luckey’s creation and offered some help in its development. Luckey then sent the ZeniMax employee a copy of his prototype where the employee and other ZeniMax personnel added their own improvements. After their improvements, ZeniMax entered into a Non-Disclosure Agreement with Luckey to share the enhancements made on the prototype, including its use in a game ZeniMax developed.
After the prototype became a working model, ZeniMax performed demonstrations at the Electronic Entertainment Exposition. The demonstrations were only done by appointment. After adding his own modifications and merely days after the exposition, Luckey started to commercialize the headset under a newly-formed company called Oculus VR.
With the commercialization of the Rift headset, Oculus received money via Crowdfunding. Through Crowdfunding, Oculus was able to raise $2.4 million. In 2014, with its widespread popularity, Facebook bought Oculus for $2 billion. There are plans to release a consumer version of the headset in early 2016.
In May 2014, ZeniMax sued Oculus VR, claiming Oculus VR misappropriated trade secrets. In the complaint, ZeniMax claimed that Oculus and Luckey did not have the “necessary expertise or technical know-how to create a viable virtual reality headset.” It was claiming Luckey and Oculus could not have developed Rift without the help and support of ZeniMax and its personnel. However, the complaint did not list the stolen intellectual properties.
With the widespread success of Oculus and the headset, ZeniMax is seeking compensation for the misuse of its intellectual properties, including trade secrets and copyrighted programs.
As a response, Facebook and Oculus filed a motion to dismiss. The judge dismissed the argument and stated that the Non-Disclosure Agreement was neither specific nor did it provide consideration for keeping the information secret. The judge also dismissed the argument that ZeniMax did not take the reasonable steps to protect the trade secrets.
The legal problems for Oculus do not end there. Another lawsuit was filed against founder Palmer Luckey and Oculus. This lawsuit was filed by Total Recall Technologies, a Hawaii-based Technology company that hired Luckey in 2011 to create a virtual reality headset. Total Recall Technology alleges Luckey had stolen the idea and breached a confidentiality agreement. On January 16, 2016, the judge allowed the breach of contract claim to proceed, but dismissed every other claim.
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