Oculus to pay $250 million in infringement case, but it's a win

In context: Two years ago ZeniMax Media accused John Carmack of "misappropriating trade secrets" when he left id Software to go to work for Oculus. A jury ruled in favor of ZeniMax and ordered Oculus to fork over $500 million for breach of contract and copyright infringement.

Yesterday in an appeal to a US District Court in Dallas, the VR headset maker saw its penalty cut in half. The original ruling called for the virtual reality company to pay $200 million for breaking an NDA and $50 million for copyright infringement. Additionally, Oculus and Palmer Lucky were required to pay $50 million each for false designation, and company co-founder Brendan Iribe was handed a $150 million bill in the suit.

US District Judge Ed Kinkeade reaffirmed that the $200 million NDA disclosure and $50 million infringement penalties were valid. However, it was the court's opinion that the other $250 million awarded by the jury was excessive and wiped it out.

ZeniMax was also seeking a permanent injunction against the sale of Oculus headsets since they violated its intellectual property ownership. Judge Kinkeade denied the motion, agreeing with Oculus that such a sales ban would cause undue hardship for the company, investors, and consumers.

Oculus did not deny infringing copyrighted material. Its argument was as to the degree to which it infringed. The defense presented evidence during the hearing showing that only seven lines of code "out of approximately 42 billion lines" in Oculus software belonged to ZeniMax.

Bloomberg reports that both companies are satisfied with the outcome. While ZeniMax was somewhat disappointed that the penalties were cut in half, it was pleased that it will be receiving an additional $54 million in interest on top of the $250 million award.

Meanwhile, Oculus parent company Facebook is relieved to have reduced the original judgment by such a considerable amount.

"We've said from day one the ZeniMax case is deeply flawed, and today the court agreed," Paul Grewal, Facebook vice president, and deputy general counsel said in a statement. "Our commitment to Oculus is unwavering, and we will continue to invest in building the future of VR."

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