Facebook Inc.’s big ambitions in the growing virtual reality industry could be threatened by a court order that would prevent it from using critical software code another company claims to own, according to legal and industry experts.
Video game publisher ZeniMax Media Inc. asked a Dallas federal judge to issue an order blocking Facebook unit Oculus from using or distributing the disputed code, part of the software development kit that Oculus provides to outside companies creating games for its Rift VR headset.
The decision is still likely a few months away, but intellectual property lawyers said ZeniMax has a decent chance of getting the order, which would mean Facebook faces a tough choice between paying a possibly hefty settlement or fighting on at risk of jeopardizing its position in the sector.
Oculus spokeswoman Tera Randall said last Thursday the company would challenge a $500 million jury verdict on Feb. 1 against Oculus and its co-founders Palmer Luckey and Brendan Iribe for infringing ZeniMax's copyrighted code and violating a non-disclosure agreement.
Randall said Oculus would possibly file an appeal that would "allow us to put this litigation behind us."
The VR market is still small at the moment. The total sales of VR hardware and software totaled $2.7 billion in 2016 and are mainly limited to gaming. However, Facebook chief Mark Zuckerberg has predicted the technology “will become a part of daily life for billions of people.” revolutionizing social media, entertainment and medicine.
The jury decided Oculus had not stolen trade secrets but had infringed ZeniMax's intellectual property. It also said Oculus breached the non-disclosure agreement.
If Facebook can get past the injunction fight, the calculus could change, said Edward Naughton, a Boston-based copyright lawyer with Brown Rudnick. Facebook may believe it has strong arguments on appeal or, because it has so much cash on hand, it may hope to wear ZeniMax down to the point where it settles on favorable terms.