On February 1, 2017, a Texas jury awarded Zenimax $500 million following trial in Zenimax’s longstanding dispute with Oculus, the creators of the Oculus Rift virtual reality system. Zenimax and Oculus had initially worked together on the Oculus Rift, with Zenimax programmer John Carmack (a well-known figure in the video game industry) working with Oculus founder Palmer Luckey (at the time a college student) to improve the Oculus Rift. As part of this collaboration, Zenimax shared certain confidential information and technology with Luckey pursuant to a Non-Disclosure Agreement (NDA). Eventually, however, Oculus stopped its collaboration with Zenimax and was in 2014 purchased by Facebook. Shortly after that purchase, Carmack and several other Zenimax employees left Zenimax and joined Oculus, with Carmack being named Oculus’s Chief Technology Officer. In its Complaint, Zenimax alleged that Oculus improperly took and used Zenimax proprietary and confidential information, including the improvements and code that Zenimax had contributed to Oculus Rift during their prior collaboration. Zenimax sought over $4 billion in damages for misappropriation of trade secrets, copyright and trademark infringement, and breach of the non-disclosure agreement.
The jury rejected Zenimax’s trade secret claim (which represented the bulk of the damages Zenimax was seeking), but awarded Zenimax $500 million for breach of the NDA between Luckey and Zenimax, and on Zenimax’s copyright and trademark claims. The court has not yet determined whether Zenimax is also entitled to an injunction against Oculus. While obviously on a much larger scale, the case presents a familiar story of employees leaving to join a competitor, and bringing with them information taken from their former employer. The case highlights the importance of strong contractual provisions preventing the sharing of company information, especially by departing employees. As this case highlights, those contractual provisions can sometimes provide broader protections than trade secret statutes (which courts and juries often struggle to interpret) while still providing for substantial remedies.