The jury found Oculus, which Facebook bought in 2014, had breached a contract with video game developer Zenimax when launching its own VR headset. Oculus said it was "disappointed" and would appeal against the ruling. The case threatened to overshadow Facebook’s latest results, which showed it enjoyed a strong end to the year.
Facebook’s net profit more than doubled to $3.6bn in the fourth quarter. The social network was helped by 53% growth in advertising revenues, and said it was on course to hit two billion users in the first half of 2017.
Shortly before the results came out, the court awarded Zenimax damages from Facebook, Oculus and Oculus executives following a three-week trial.
Zenimax had argued that its early innovations in virtual reality were unlawfully copied when Oculus built its own headset, the Rift.
An Oculus spokesperson said the jury rejected this argument, but did find that Oculus breached a contract with Zenimax and infringed some of its copyright.
"The heart of this case was about whether Oculus stole Zenimax’s trade secrets, and the jury found decisively in our favour," the Oculus spokesperson said.
Zenimax chief executive Robert Altman said: "We are pleased that the jury in our case in the US District Court in Dallas has awarded Zenimax $500m for defendants’ unlawful infringement of our copyrights and trademarks."
The co-founder of Oculus, Palmer Luckey, was found to have broken a non-disclosure agreement with the firm.
Few people will have given Mark Zuckerberg as many headaches as Palmer Luckey.
The 24-year-old founded Oculus VR, and when Facebook stepped in to buy the firm for $2bn, he was rewarded very handsomely indeed. Then it went a bit downhill.
First, it was revealed he was using some of that money to fund a pro-Donald Trump trolling campaign, which led to Facebook removing him from public view. He didn’t even turn up to his own company’s developer’s conference last year.
And now, a jury has ruled that he broke a non-disclosure agreement that’ll mean $500m in damages (unless Facebook wins on appeal).