Oculus VR

Founding

As a head-mounted display (HMD) designer at the University of Southern California Institute for Creative Technologies, Palmer Luckey earned a reputation for having the largest personal collection of HMDs in the world, and was a longtime moderator in Meant to be Seen (MTBS)'s discussion forums.

Through MTBS's forums, Palmer developed the idea of creating a new head-mounted display that was both more effective than what is currently on the market, and inexpensive for gamers. To develop the new product, Luckey founded Oculus VR with Scaleform co-founders Brendan Iribe and Michael Antonov, engineer Jack McCauley, Nate Mitchell and Andrew Scott Reisse.

Coincidentally, John Carmack of id Software had been doing his own research on HMDs and happened upon Palmer's developments as a fellow MTBS member. After sampling an early unit, Carmack favored Luckey's prototype and just before the 2012 Electronic Entertainment Expo (E3), id Software announced that their future updated version of Doom 3, Doom 3 BFG Edition, would be compatible with head-mounted display units.

During the convention, Carmack introduced a duct taped head-mounted display based on Palmer's Oculus Rift prototype, which ran Carmack's own software. The unit featured a high speed IMU and a 5.6-inch (14 cm) LCD, visible via dual lenses that were positioned over the eyes to provide a 90 degrees horizontal and 110 degrees vertical stereoscopic 3D perspective. Carmack later left id Software as he was hired as Oculus VR's Chief technology officer.

Funding for Oculus Rift and company

Following the demonstration of the Oculus Rift prototype at E3 in June 2012, on August 1, 2012, the company announced a Kickstarter campaign to further develop the product. Oculus announced that the "dev kit" version of the Oculus Rift would be given as a reward to backers who pledged $300 or more on Kickstarter, with an expected shipping date set of December 2012 (though they did not actually ship until March 2013).

There was also a limited run of 100 unassembled Rift prototype kits for pledges over $275 that would ship a month earlier. Both versions were intended to include Doom 3 BFG Edition, but Rift support in the game was not ready, so to make up for it they included a choice of discount vouchers for either Steam or the Oculus store. Within four hours of the announcement, Oculus secured its intended amount of US$250,000, and in less than 36 hours, the campaign had surpassed $1 million in funding, eventually ending with $2,437,429.

On December 12, 2013, Marc Andreessen joined the company's board when his firm, Andreessen Horowitz, led the $75 million Series B venture funding. In total, Oculus VR has raised $91 million with $2.4 million raised via crowdfunding.

Facebook acquisition and chief scientist

Although Oculus VR had only released a development prototype of its headset, on March 25, 2014, Mark Zuckerberg announced that Facebook would be acquiring Oculus VR for US$ $2 billion, pending regulatory approval. The deal includes $400 million in cash and 23.1 million common shares of Facebook, valued at $1.6 billion, as well as additional $300 million assuming Facebook reaches certain milestones. This move was ridiculed by some backers who felt the acquisition was counter to the independent ideology of crowdfunding.

Many Kickstarter backers and game industry figures, such as Minecraft developer Markus Persson, criticized the sale of Oculus VR to Facebook. On March 28, 2014, it was announced that Michael Abrash had joined the company as Chief Scientist.

As of January 2015, the Oculus VR Headquarters has been moved from Irvine, California to Menlo Park, California, where Facebook's Headquarters is also located. Oculus has stated that this move is for their employees to be closer to Silicon Valley.

Oculus Story Studio

In 2014, Oculus VR founded Oculus Story Studio to pioneer content creation for VR cinema. The studio is led by Creative Director Saschka Unseld, a six year veteran of Pixar. The studio was first launched publicly at the 2015 Sundance Film Festival.

Partnership with Samsung

In 2014, Samsung partnered with Oculus to develop the Gear VR, after the success of the, in-development, Rift.

During the course of 2014-15, two Innovator Editions, in-development versions of the Gear VR mainly sold to developers for sole research and understanding, were developed, manufactured, and sold. The devices that the Innovator Editions used were the Note 4, Galaxy S6, and Galaxy S6 Edge.

On 20 November 2015, the consumer edition of the Gear VR was released to the public, and sold out during the first shipments. The device supported the Samsung Galaxy Note 5, Samsung Galaxy S6, Samsung Galaxy S6 Edge, Samsung Galaxy S6 Edge+, and later, the Samsung Galaxy S7, and Samsung Galaxy S7 Edge.

Acquisition of Surreal Vision

On May 2015, Oculus acquired British company Surreal Vision, a company based on 3D scene-mapping reconstruction and augumented reality. News reported that Oculus and Surreal Vision could create "mixed reality" technology in Oculus's products, similar to the upcoming HMD, Microsoft HoloLens. They reported that Oculus, with Surreal's help, will make telepresence possible.

Acquisition of The Eye Tribe

On December 28, 2016 media reported that Facebook Inc., the parent company of Oculus, has acquired the Danish startup The Eye Tribe for an undisclosed amount. The company delivers eye tracking technology that's used to improve virtual reality user experience and it has developed rendering technology that's only generating perfect graphics on the retina where you're looking.

Oculus Rift

The Oculus Rift is a virtual reality head-mounted display. Software, most notably video games, must be custom programmed to use the Rift. Developer kit preorders were made available for $300 through Oculus VR's website starting on September 26, 2012. These kits sold at a rate of 4–5 per minute for the first day, before slowing down throughout the week. In March 2014 at GDC, Oculus announced the upcoming Devkit 2 (DK2) which they expected to begin shipping in July 2014.

In January 2016 at CES 2016, Oculus announced it will start shipping the Oculus Rift headset to customers in 20 countries on March 28, and it will cost $599. In January 2016, as a gesture of appreciation, Oculus announced it will give the 6,855 people who participated in the 2012 Kickstarter project a special-edition Oculus Rift one day before the new product goes on sale to the public on March 28, 2016.

Oculus Touch motion controllers officially launched on December 6, 2016 for $199. Touch motion controllers had 53 game options at launch. Oculus Rift Earphones also started delivery on December 6, 2016 for $49.

Conflicts with ZeniMax Media

Around May 2014, shortly after Facebook made its deal to acquire Oculus VR, the Wall Street Journal reported that ZeniMax Media, the parent company of Carmack's former employer, id Software, had sent two letters to Facebook and Oculus VR, asserting that any technology contributions Carmack had made towards VR while he was still an employee of id Software include the "VR testbed" that Carmack had frequently demonstrated, were within the intellectual property (IP) of id and ZeniMax. In a statement, ZeniMax said that they "provided necessary VR technology and other valuable assistance to Palmer Luckey and other Oculus employees in 2012 and 2013 to make the Oculus Rift a viable VR product, superior to other VR market offerings."

ZeniMax stated that a 2012 non-disclosure agreement (NDA) and a non-ownership agreement that covered VR technology and signed by Luckey, prior to Oculus VR's formation, would cover any of Carmack's contributions to VR.

ZeniMax contends that they had attempted to resolve these issues with Oculus prior to their acquisition by Facebook "whereby ZeniMax would be compensated for its intellectual property through equity ownership in Oculus but were unable to reach a satisfactory resolution". Oculus denied the claims, stating that "It's unfortunate, but when there's this type of transaction, people come out of the woodwork with ridiculous and absurd claims".

ZeniMax formally filed a lawsuit against Luckey and Oculus VR on May 21, 2014 in the United States District Court for the Northern District of Texas and seeking a jury trial. The lawsuit contended that Luckey and Oculus used ZeniMax's "trade secrets, copyrighted computer code, and technical know-how relating to virtual reality technology", as provided by Carmack, to develop the Oculus Rift product, and sought for financial damages for contract breach, copyright infringement, and unfair competition. ZeniMax also charged that Oculus, through Carmack, were able to hire several former ZeniMax/id Software employees who also had technical knowledge of its VR technology, which would allow them to rapidly fine-tune the VR testbed system to create the Rift. In its files, ZeniMax revealed it has "invested tens of millions of dollars in research and development" into VR technology, and that because they felt "Oculus and Luckey lacked the necessary expertise and technical know-how to create a viable virtual reality headset", they needed "sought expertise and know-how from Zenimax".

Oculus initially responded to the charges as "The lawsuit filed by ZeniMax has no merit whatsoever. As we have previously said, ZeniMax did not contribute to any Oculus technology. Oculus will defend these claims vigorously." The company filed its formal response on June 25, 2014, stating that ZeniMax "falsely claims ownership in Oculus VR technology in a transparent attempt to take advantage of the Oculus VR sale to Facebook". Oculus stated that prior to the acquisition by Facebook, "ZeniMax never raised any claim of infringement against Oculus VR, undoubtedly because ZeniMax never has contributed any intellectual property or technology to Oculus VR".

The response stated that ZeniMax's filing "deliberately misstating some facts and omitting others" and that "there is not a line of ZeniMax code or any of its technology in any Oculus VR product". Oculus' response included photographs and documents that demonstrated they had been working on their own VR technology as early as August 2010. The response further contended that the key document of ZeniMax's suit, the NDA signed by Luckey, was "never finalized", and thus is not a "valid and enforceable agreement".

ZeniMax amended the case to include Facebook among the defendants on August 29, 2014. ZeniMax charged that Facebook intended to "leverage and commercially exploit Oculus’s virtual reality technology — which is built upon ZeniMax’s unlawfully misappropriated intellectual property — for the financial benefit of Facebook’s core business of online social networking and advertising."

Oculus and Facebook attempted to have the case dismissed, but the presiding judge disagreed, and, in August 2015, allowed the case to proceed to a jury trial expected to start in August 2016. During the discovery phase, ZeniMax had sought a deposition from Facebook CEO's Mark Zuckerberg, believing he had "unique knowledge" of the Facebook-Oculus deal. At request from Facebook, the judge ruled that Zuckerberg must provide a deposition, but only after lesser-ranking employees had been deposed as to have a ""less intrusive discovery" process.

In August 2016, it was discovered that ZeniMax had further modified their complaint, specifically adding by name Carmack as Oculus's CTO, and Brendan Iribe as Oculus' CEO. The updated complaint alleged that during his last days at id Software, Carmack "copied thousands of documents from a computer at ZeniMax to a USB storage device", and later after his employment was terminated he "returned to ZeniMax's premises to take a customized tool for developing VR Technology belonging to ZeniMax that itself is part of ZeniMax's VR technology". ZeniMax's complaint charged that Iribe had directed Oculus to "[disseminate] to the press the false and fanciful story that Luckey was the brilliant inventor of VR technology who had developed that technology in his parents' garage", when "Luckey lacked the training, expertise, resources, or know-how to create commercially viable VR technology", thus aiding in the IP theft from ZeniMax.

Further, the updated complaint asserts Facebook had more involvement as it knew or had reason to know that Oculus' claims on the VR IP was false. Oculus responded, "This complaint filed by ZeniMax is one-sided and conveys only ZeniMax's interpretation of the story. The court had a computer forensic expert evaluate the contents of Carmack's computer, and on October 28, 2016, the expert reported that from their findings "statements and representations that have been sworn to and are before the court are factually inaccurate". The court ordered Oculus to comply with providing previously-redacted communications it had with Carmack as a result, as well as requesting Samsung to provide information on its Samsung Gear VR which was co-created with Oculus.

The jury trial started on January 9, 2017. During the trial, Zuckerberg testified in court that he believed the allegations from ZeniMax Media were false. In the plaintiff's closing arguments, ZeniMax's lawyers believed that they should receive $2 billion in compensation for Oculus' actions, and an additional $2 billion in punitive damages.

The jury trial completed on February 2, 2017, with the jury finding that Luckey had violated the NDA he had with ZeniMax, and awarding $500 million to ZeniMax. The jury affirmed the NDA was an enforceable document and Luckey and Oculus had confirmed receipt of ZeniMax's code during a six-month period following its signing, and also affirmed that Carmark had taken code and other IP from ZeniMax, uploaded it to his Oculus computer, and then when the ligitation for this case was received, he had tried to wipe the hard drives of this code.

Oculus will have to pay $200 million for breaking the non-disclosure agreement, and additional $50 million for copyright infringement; for false designation of origin charges, Oculus and Luckey will have to pay $50 million each, while Iribe will be responsible for $150 million. The jury did not find Oculus misappropriated or stole trade secrets, which ZeniMax had contended as part of their case.

While Oculus said "the jury found decisively in our favor" over the issue of trade secrets, the company plans to file an appeal on the other charges. Carmack stated that he disagreed with the decision, particularly on ZeniMax's "characterization, misdirection, and selective omissions" regarding his behavior, adding that he had accounted for all the data in his possession. Carmack took issue with one of ZeniMax's expert witnesses who testified that non-literal copying, the act of creating a program with similar functions but using different computer code, constitutes a copyright violation.

ZeniMax stated that it is considering a court-ordered halt to all Oculus Rift units in light of the jury decision; and on February 24, 2017, filed an injunction to have the court halt sales of the Oculus Rift and development kits.

In a separate lawsuit filed in March 2017, Carmack asserted that ZeniMax did not complete its payment to him of the acquisition of id Software, and asked the court to find for him for the remaining $22 million he stats the company owes him. ZeniMax's lawyers asserted that from the Oculus case, they had not been found in voilation of Carmack's employment after ZeniMax acquired id Software and that this new suit was "without merit".