Facebook’s attorneys had just one weekend to ensure the company wasn’t stepping into a legal quagmire before buying Oculus for $2 billion, Facebook co-founder Mark Zuckerberg testified in a Dallas courtroom today, according to reporters tweeting from the trial.
“Your plan was to begin legal diligence on Friday, and sign the deal on Monday,” an attorney said, while questioning Zuckerberg under oath today, as reported by the New York Times’ Mike Isaac on Twitter.
To that, Isaac reports, Zuckerberg replied simply: “Yep.”
Lawyer, incredulously: "Your plan was to begin legal diligence on Friday, and sign the deal on monday."— ಠ_ಠ (@MikeIsaac) January 17, 2017
The exchange came in the first day of testimony this week in a $2 billion lawsuit over who developed the technology behind the Oculus Rift VR headset and provided some insight into the initial tact that ZeniMax might take in proving its allegations.
The case, which is expected to last three weeks, kicked off last week with opening arguments. Today was set aside entirely for testimony from Zuckerberg, court officials told Polygon.
A cavalcade of reporters attended today’s trial from a mix of publications including The New York Times, Dallas Morning News, Bloomberg and tech site Gizmodo.
Oculus CTO John Carmack, founder Palmer Luckey and former CEO Brendan Iribe were among those in the audience along with “armies of lawyers from Facebook and Zenimax,” Gizmodo’s William Turton tweeted from the courtroom. He added that Palmer was sporting a blue suit and pink tie and that Carmack was in an all-tan suit.
Palmer was sporting a blue suit and a pink tie. Carmack opted for an all tan suit. #OculusvZeniMax— William Turton (@WilliamTurton) January 17, 2017
Zuckerberg quickly walked through the cost of buying the company. The company was purchased for $2 billion, but Zuckerberg added, according to Isaac, that there was an additional $700 million set aside for retention of key people and $300 million for milestone earnouts.
Zuck on Oculus deal: "we bought the company for about 2b, had additional 700mm in retention for key folks, 300 mm earnout for milestones"— ಠ_ಠ (@MikeIsaac) January 17, 2017
He told the courtroom that no one has been fired over the allegations brought forth by ZeniMax and reiterated that Oculus products are built on Oculus technology, Turton reported.
"There’s a lot more to develop to make virtual reality a mainstream product than what was there when we bought the company,” Zuckerberg said, according to Isaac.
Dallas Morning News’ Melissa Repko reported from the courtroom that the morning’s questioning seemed to be mostly focused on ZeniMax’s attorney arguing that Zuckerberg rushed the deal to buy Oculus and didn't do due diligence.
ZeniMax attorney will likely pick up where he left off. He's arguing that Zuckerberg rushed deal to buy Oculus and didn't do due diligence.— Melissa Repko (@melissa_repko) January 17, 2017
Zukerberg’s rush to buy Oculus seems to have been driven by his surprise that the company was so far ahead in VR development, Repko reports.
In emails to the Facebook board member who introduced Zuckerberg to the tech, Zuckerberg wrote that the tech “blew my brain wide open” and that “I wanted to just give him all my money on the spot.”
Zuckerberg says he wanted Facebook to get in early on virtual reality & augmented reality. In 2014 email, he wrote "Oculus is miles ahead."— Melissa Repko (@melissa_repko) January 17, 2017
After a short break around 10:30 a.m. ET, the questioning continued with ZeniMax’s attorney continuing the press the issue and then pushing about a letter sent to Facebook from ZeniMax two weeks before the deal closed, Turton reports.
Zuckerberg said that people come out of the woodwork when deals close, and that he has never even heard of ZeniMax when he recicived letter.— William Turton (@WilliamTurton) January 17, 2017
Zuckerberg replied that his attorneys wouldn’t have gone over the claim with him because it wasn’t credible, Repko reports.
He says his attorneys wouldn't have spent time reviewing ZeniMax's claim with him because it wasn't credible.— Melissa Repko (@melissa_repko) January 17, 2017
ZeniMax’s questioning of Zuckerberg wrapped up this morning shortly after a contentious exchange between the attorney and Zuckerberg, Isaac reports.
heated exchange.— ಠ_ಠ (@MikeIsaac) January 17, 2017
Lawyer: “If you steal my bike, and you paint it and put a bell on it, does that make it your bike?”
Facebook’s lawyer then spent some of the afternoon cross-examining Zuckerberg, spending a chunk of the time having him careful go through his personal history and the history of the technology, Turton.
Zuck and FB lawyer are pretty much going back and forth on how amazing VR is.— William Turton (@WilliamTurton) January 17, 2017
Following a lunch break, the judge hearing the case admonished reporters for live tweeting during the trial and said it would no longer be allowed.
Zuckerberg’s testimony wrapped up about 4:30 p.m. ET, according to Isaac.
and with that, Mark Zuckerberg's testimony is over and he is leaving the building. Will twete more stuff later.— ಠ_ಠ (@MikeIsaac) January 17, 2017
Tomorrow, Palmer and potential Iribe are set to testify in the case.
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, which is now owned by Facebook, denies the allegations, saying the lawsuit came to a head after Facebook purchased the company and as a “chance for a quick payout.”
The trial kick off was bookended by twin salvos of accusatory statements from ZeniMax and Oculus.
ZeniMax not only accused Oculus of stolen trade secrets but destruction of evidence. Oculus called the lawsuit wasteful litigation and an attempt by ZeniMax to take credit for technology that it did not have the vision, expertise, or patience to build.
The accusation of destruction of evidence may be based on an interpretation of findings of a court-appointed forensic expert who was ordered to examine Carmack’s computer. The details of those findings, while potentially important to the case, remain mostly under seal, likely until they’re presented in court.
In October, a judge ordered that Samsung had three weeks to provide details to ZeniMax about the work the company did with Oculus in co-creating the Samsung Gear VR, which runs on Oculus software.
Last August, ZeniMax amended its complaint to be more blunt about the accusations against Oculus, saying the company misappropriated trade secrets, benefiting from years of the company’s research and experimentation with virtual reality technology.