Law and industry experts believe that Facebook’s huge ambitions in the emerging virtual reality industry may be affected by a court ban. The ban will bar the social media giant from using key software codes that allegedly infringe.
Last Thursday, video game publisher ZeniMax asked the United States federal judge in Dallas to issue a ban on Facebook's Oculus division from using or distributing controversial code that was embedded in software that Oculus provided to outside companies to help develop Rift VR games.
Although the judge may not wait until a few months before deciding whether to approve the ban, intellectual property lawyers believe that there is a high probability that ZeniMax’s ban application will be approved, which will cause Facebook to face difficult choices: either to pay a high settlement fee or to respond A lawsuit that may threaten its status in the industry.
Facebook is still actively responding. Oculus spokesman Tera Randall said on Thursday that the company will appeal the jury’s unfavorable verdict against Oculus and its co-founders on February 1. The ruling at that time required Oculus to pay $500 million in compensation and found that the company’s co-founders Palmer Luckey and Brendan Iribe infringed the ZeniMax copyright code and breached the confidentiality agreement.
Randall did not comment further on this issue.
Once the ban on ZeniMax is approved, Oculus must stop distributing code to developers or stop selling games that use this code. Facebook spent $3 billion to acquire Oculus in 2014.
Stephanie Llamas, a SuperData analyst at game market research firm, said that such a court injunction would pose a huge obstacle to the development of Oculus. This will provide an important opportunity for competitors including HTC, Sony and Alphabet to become pioneers.
Rift's own sales will not be banned, but Lamars said that the lack of game content will hinder the sale of this product, making it at a disadvantage in competition with HTC Vive and Sony PlayStation VR.
The virtual reality headline market is currently small, with a total of $2.7 billion in hardware and software sales in 2016, and is limited to the gaming market. But Facebook CEO Mark Zuckerburg once predicted that the technology "will become part of the daily lives of billions of people," revolutionizing the social media, entertainment, and medical industries.
SuperData expects that the virtual reality market will reach 37 billion U.S. dollars by 2020. Similarly, investment company Cantor Fitzgerald also released a report last year, predicting that the virtual reality business will contribute 10% of Facebook’s revenue within four years.
ZeniMax's lawsuit comes from Raja's communication with video game developer John Carmack in 2012. Raja signed a confidentiality agreement with ZeniMax on the matter.
Kamak joined Oculus in 2013 as a CTO. ZeniMax launched a lawsuit in 2014 that accused Carmichael of the work of the company as a key element of the Rift. Facebook criticized ZeniMax's "sour grape" mentality at the trial stage because they missed the major trend of virtual reality.
Zuckerberg also testified in court that "The idea that Oculus's products were developed based on the technology of others is wrong."
The jury found that Oculus did not steal trade secrets, but found that it violated ZeniMax’s intellectual property rights and violated confidentiality agreements.
Intellectual property lawyers believe that the factors considered by the judge include whether ZeniMax will continue to be harmed and whether the compensation is sufficient to compensate for the loss.
Edward Naughton, a copyright attorney in Boston, said that ZeniMax's defense was powerful because his technology was still used without his permission, and the jury decision did not compensate for all the losses.
"I think their chances are great," Norton said.
New York copyright attorney Mitchell Shelowitz pointed out that the confidentiality agreement clearly states that ZeniMax has the right to obtain a ban in case of default.
However, not all lawyers believe that ZeniMax's position is strong. Joshua Rich, an intellectual property attorney in Chicago, believes that Facebook has an opportunity to overturn the ban. They can argue that since Oculus and ZeniMax are not direct competitors, the latter’s performance has not been affected.
Norton said that if Facebook can successfully pass the "ban war", the pattern will be reversed. Facebook may think that its own defense in the appeal is strong, or that it has cash in hand, hoping that ZeniMax can reduce the settlement amount.
"Facebook is well-funded," Norton said. "So you can put your opponent into a state of fatigue."
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