Earlier this year, ZeniMax won a judgment for $500 million against Oculus Rift and other related parties. After winning that judgment, ZeniMax motioned for an injunction preventing the sale of the Oculus Rift.
As always, there are a number of misconceptions about what ZeniMax is arguing and their likelihood of success. News articles regarding high stakes litigation often become echo chambers and lose focus on the actual issues of the case. You can read a copy of ZeniMax’s memorandum in support of their motion here, which was filed unsealed. The memo provides a great recitation of the facts of the case, which have mostly remained under seal until now.
ZeniMax is in an odd spot, because the jury found Oculus liable for trademark and copyright infringement, including breach of an NDA, but not misappropriation of trade secrets. This makes their case on an injunction much more difficult, and accordingly we can see that ZeniMax includes a couple of unusual arguments in their memo.
ZeniMax makes much ado about the Kickstarter video used during Oculus’s Kickstarter campaign, claiming that the video was made at ZeniMax and infringes ZeniMax’s trademarks, particularly Doom. ZeniMax states:
Additionally, Defendants should be enjoined from further public display of any materials that perpetuate the false narrative that Oculus — not ZeniMax — created the breakthrough technology that underlies Oculus’s existence. These materials include but are not limited to the Kickstarter video described above. Although Oculus’s Kickstarter campaign concluded in 2012, the video remains available online and should be taken down immediately.
ZeniMax Memo in Support for Injunction, pg. 7.
As of the time of this article, Oculus has not removed the infringing video from Kickstarter. This is unsurprising, as Oculus likely has a number of counter arguments being prepared.
The real crux of ZeniMax’s argument is a damages clause that was located within the breached NDA. Specifically, the parties agreed that any damages from a breach of the NDA would be considered “irreparable” and that any available remedy at law would be inadequate to make the non-breaching party whole.
This is a key and often litigated element of an injunction. Whether or not the NDA is sufficient for this element is likely going to be extensively briefed by both parties. ZeniMax recognizes this and introduces a citation dump of cases that help support the NDA. I would assume that Oculus will provide their own case citations reaching the opposite conclusion.
Ultimately, it should be rather simple for Oculus to avoid the whole issue of an injunction. Oculus can simple get a “clean room” team to create code that will replace ZeniMax’s copied code. This team would not have access to the infringing code. Once that happens, there is no continuing copyright infringement.
Once the issue is fully briefed by the parties, expect a full breakdown and analysis by me. In the meantime, the memorandum filed by ZeniMax should help shed some light into the real factual background of this case.