In a federal courtroom in Dallas yesterday, Mark Zuckerberg took the stand to explain that Facebook did not steal virtual reality when it paid $2 billion to acquire Oculus in 2014. Wearing a suit and tie (!), Zuckerberg was subjected to a grilling about contracts and legal technicalities in a lawsuit that could throw a major wrench in the company’s road map.
But let’s back up. Facebook is being sued by ZeniMax Media. That’s not a name that many people recognize, but it is the parent company of a few well-known video-game developers. They own Bethesda Game Studios, makers of The Elder Scrolls and Fallout, and id Software, the studio that made Doom and Quake. When they acquired id a few years ago, ZeniMax also acquired legendary designer and tinkerer John Carmack, who was working on VR tech of his own.
To hear Facebook tell it, Carmack and Oculus founder Palmer Luckey met on a VR message board, and they worked together to refine the technology, eventually bringing a rough but promising prototype to E3, the video-game trade show, in 2012. In late November of 2013, it was announced that Carmack was officially leaving id to work for Oculus as their CTO. On his way out the door, he copied thousands of emails and files from his ZeniMax–owned computer — intellectual property that ZeniMax claims that they own.
While he was questioned by ZeniMax’s lawyer last week, Carmack admitted to taking thousands of documents and lines of code. “I copied files that I shouldn’t have. I think stealing is an uncharitable way to look at it since I didn’t benefit and ZeniMax didn’t lose, but I shouldn’t have done it, and I did,” Carmack said while being questioned by ZeniMax’s lawyer. In testimony, Carmack was eager to talk about the documents he took, and explained that “by the strict intellectual property definition” his copying of documents was considered stealing. Carmack argued that the emails he copied didn’t contain source code, rather just snippets of source code, but, Carmack said, there may have been source code included in the attachments of the emails.
ZeniMax is suing Facebook for $2 billion, the same amount Facebook paid for Oculus. They are also claiming that Oculus’s kid-genius (and right-wing meme funder) Palmer Luckey violated a 2014 NDA he signed with ZeniMax in order to look at some of Carmack’s work. Oculus is the entity being sued here, not Facebook, but lawyers for ZeniMax are claiming that Facebook did not perform due diligence about Carmack and Luckey’s contractual relationships before closing the deal.
Facebook, unsurprisingly, is trying to cast ZeniMax as bitter and jealous, having turned down a chance to get in on the Oculus ground floor by rejecting deals that would have given it a stake in the budding company.
Which brings us to yesterday, when Zuckerberg took the stand. Here’s what we learned.
Zuckerberg claims to have never heard of ZeniMax before the Oculus deal.
He appeared confident that the court would rule in Oculus’s favor. “It is pretty common when you announce a big deal or do something like that,” he said. “All kinds of people come out of the woodwork and claim that they just own some portion of the deal.” Still, lawyers were curious about how Zuckerberg didn’t know about the very recent history of Carmack, who is revered in the gaming and tech industries.
Facebook rushed the deal.
Zuckerberg wanted a deal drafted Friday to be signed Monday, although he claimed that Facebook spends months considering potential acquisitions before they pull the trigger. ZeniMax’s lawyer, Toni Sammi, continued to press Zuckerberg on the rushed deal, however. He noted that Zuckerberg did not learn about the aforementioned NDA that Luckey had signed until 2016, and presented texts in which the Facebook CEO said, “keep pushing forward until we have something we can sign on a moment’s notice, then we can figure out how long we wait for diligence.”
The VR rollout is slow going.
Zuckerberg also admitted that the virtual-reality effort has been more complicated than originally anticipated. “These things end up being more complex than you think up front,” he told a lawyer from Oculus’s defense team. “If anything, we may have to invest even more money to get to the goals we had than we had thought up front.”
Mark Zuckerberg does, in fact, own a suit.
You know it’s serious when he shows up in something other than a gray hoodie or T-shirt.
The trial resumes today, when Palmer Luckey is expected to take the stand.