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Facebook lost its Oculus lawsuit and has to pay $500 million

A jury ruled Oculus founder Palmer Luckey violated a non-disclosure agreement.

Palmer Luckey
Oculus VR founder Palmer Luckey
Kevork Djansezian/Getty Images

Facebook has been ordered to pay $500 million as the result of a successful lawsuit by gaming company ZeniMax that claimed Oculus co-founder Palmer Luckey violated an NDA agreement in order to build early prototypes of its Oculus Rift headset, according to Polygon.

Facebook later acquired Oculus for more than $2 billion.

A Texas jury sided with ZeniMax, awarding the company $500 million in damages following a trial in which Facebook CEO Mark Zuckerberg testified on the stand. ZeniMax was seeking as much as $6 billion in damages.*

Facebook can afford $500 million, of course. But it’s not a great look for the company or Zuckerberg, who was accused during the trial of rushing through due diligence during the acquisition process.

Investors don’t seem to care. Facebook stock is up more than 2 percent ahead of Facebook’s Q4 earnings, which the company is set to report later today.

A Facebook spokesperson did not immediately respond to a request for comment. We’ve also emailed lawyers for ZeniMax and have not yet heard back.

Update: We spoke with Facebook COO Sheryl Sandberg about the lawsuit. She said that it was “not material” to Facebook’s business. “We’re disappointed in certain elements of the decision and we’re considering our options to appeal,” she added.

A Facebook spokesperson also sent over the following statement.

“The heart of this case was about whether Oculus stole ZeniMax's trade secrets, and the jury found decisively in our favor. We're obviously disappointed by a few other aspects of today's verdict, but we are undeterred. Oculus products are built with Oculus technology. Our commitment to the long-term success of VR remains the same, and the entire team will continue the work they've done since day one – developing VR technology that will transform the way people interact and communicate. We look forward to filing our appeal and eventually putting this litigation behind us.”

* Correction: A previous version of this story inaccurately stated the amount that ZeniMax was seeking in damages.

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