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Judge denies motion to dismiss in ZeniMax, Oculus VR lawsuit

A judge has dismissed motions by both Facebook and Palmer Luckey and Oculus VR to dismiss the federal lawsuit filed against the group by ZeniMax Media over accusations of stolen trade secrets, according to court documents.

That means that the case will proceed.

ZeniMax alleged in the May lawsuit that the Oculus Rift is being constructed on trade secrets that Oculus VR's founder and half a dozen of ZeniMax's former employees now working at Oculus improperly possess. The company also argues that Oculus is wrongfully benefiting from years and millions of dollars worth of ZeniMax research and, rather than agree to a business arrangement in which ZeniMax would receive a 2 percent equity stake in the company, Oculus began poaching its employees.

In the July 27 ruling to deny Luckey and Oculus VR's motion to dismiss, U.S. District Judge Jorge A. Solis addressed the three different counts the two were seeking to have dismissed. Specifically, the defendants in the case were seeking to dismiss the counts that dealt with the misappropriation of trade secrets, breach of an non-disclosure agreement and unjust enrichment.

The defendants argued that the NDA wasn't enforceable because the term "proper purpose" wasn't defined and that Luckey wasn't given anything in return for his promise to keep things secret. The judge dismissed that argument out of hand. The judge also dismissed the argument that ZeniMax didn't take reasonable steps to maintain the secrecy of its trade secrets. Finally, the defendants argued that unjust enrichment isn't a cause of action in Texas, but the judge argued that recent cases have questioned that notion.

A jury trial could start in August 2016

On Monday, Judge Solis ruled to deny Facebook's motion to dismiss five counts of the lawsuit using much of the same logic as his decision late last month in regards to Luckey and Oculus VR's motion.

A chief issue, according to Solis, was that the motions were based on questions of fact, which have to be settled in court, not questions of law, which can lead to things like a dismissal.

Currently, the case is set to proceed with a discovery deadline of February 2016 and a preliminary jury trial date of Aug. 1, 2016.

Rockville, Maryland-based ZeniMax sued Oculus in May 2014, alleging that the VR startup misappropriated trade secrets in the development of the Oculus Rift headset. The lawsuit was filed weeks after ZeniMax publicly accused Carmack of providing technology to Oculus. Oculus has said it will disprove those claims. According to ZeniMax's complaint, Oculus co-founder and Rift inventor Palmer Luckey — along with a half a dozen ex-ZeniMax employees who are now working at Oculus — are building the Rift based on years and millions of dollars' worth of ZeniMax's research and copyrighted code.

Oculus denies the allegations, saying that the lawsuit came to a head after Facebook purchased the company and as a "chance for a quick payout."

The history of Luckey, the Oculus Rift, John Carmack and Zenimax-owned id Software, is a complicated and entwined one. You can read more about it in our previous coverage of the ongoing suit.

Zenimax declined to comment on the recent developments and we've reached out to Oculus Rift and Facebook for comment. We will update this story when they reply.

You can view both rulings below.


Palmer Luckey and Oculus Rift