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| Facebook loses $500m Oculus virtual reality case | Facebook loses $500m Oculus virtual reality case |
| (about 13 hours later) | |
| A US court has ordered Facebook and other defendants to pay $500m (£395m) after finding they unlawfully used a firm's virtual reality technology. | A US court has ordered Facebook and other defendants to pay $500m (£395m) after finding they unlawfully used a firm's virtual reality technology. |
| 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. | 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. | 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. | 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. | 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. |
| 'Trade secrets' | 'Trade secrets' |
| Shortly before the results came out, the court awarded Zenimax damages from Facebook, Oculus and Oculus executives following a three-week trial. | Shortly before the results came out, the court awarded Zenimax damages from Facebook, Oculus and Oculus executives following a three-week trial. |
| Zenimax argued that its early innovations in virtual reality were unlawfully copied when Oculus built its own headset, the Rift. | Zenimax argued that its early innovations in virtual reality were unlawfully copied when Oculus built its own headset, the Rift. |
| "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," said Zenimax chief executive Robert Altman. | "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," said Zenimax chief executive Robert Altman. |
| The co-founder of Oculus, Palmer Luckey, was also found to have broken a non-disclosure agreement with the firm. | The co-founder of Oculus, Palmer Luckey, was also found to have broken a non-disclosure agreement with the firm. |
| However, the jury ruled that none of the defendants misappropriated Zenimax's trade secrets. | However, the jury ruled that none of the defendants misappropriated Zenimax's trade secrets. |
| Analysis | Analysis |
| By Dave Lee, BBC North America technology reporter | By Dave Lee, BBC North America technology reporter |
| Few people will have given Mark Zuckerberg as many headaches as Palmer Luckey. | 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. | 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. | 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). | And now, a jury has ruled that he broke a non-disclosure agreement that'll mean $500m in damages (unless Facebook wins on appeal). |
| Mark Zuckerberg doesn't display many emotions - but you wonder what he'll be like behind closed doors on this one. | Mark Zuckerberg doesn't display many emotions - but you wonder what he'll be like behind closed doors on this one. |
| As it stands, Palmer Luckey is still a Facebook employee, but what he's doing there is anyone's guess - the company won't even tell me his job title. | As it stands, Palmer Luckey is still a Facebook employee, but what he's doing there is anyone's guess - the company won't even tell me his job title. |
| An Oculus spokesperson said: "The heart of this case was about whether Oculus stole Zenimax's trade secrets, and the jury found decisively in our favour." | An Oculus spokesperson said: "The heart of this case was about whether Oculus stole Zenimax's trade secrets, and the jury found decisively in our favour." |
| The firm did not comment on the $500m damages. | The firm did not comment on the $500m damages. |
| Facebook chief executive Mark Zuckerberg testified last month that "the idea that Oculus products are based on someone else's technology is just wrong". | Facebook chief executive Mark Zuckerberg testified last month that "the idea that Oculus products are based on someone else's technology is just wrong". |
| Zenimax, which owns id Software, a video games developer, was suing Facebook for $2bn. | Zenimax, which owns id Software, a video games developer, was suing Facebook for $2bn. |
| Along with the claims against Palmer Luckey, it alleged that John Carmack, co-founder of id, took intellectual property belonging to Zenimax when he left the firm to join Oculus as its full-time chief technology officer. | Along with the claims against Palmer Luckey, it alleged that John Carmack, co-founder of id, took intellectual property belonging to Zenimax when he left the firm to join Oculus as its full-time chief technology officer. |
| 'Stellar quarter' | 'Stellar quarter' |
| Virtual reality is only a small part of Facebook's current business, but is seen as important to the firm's strategy over the next 10 years. | Virtual reality is only a small part of Facebook's current business, but is seen as important to the firm's strategy over the next 10 years. |
| Most of Facebook's fourth-quarter revenue - which jumped 54% to $27.6bn - came from adverts on its social network. | Most of Facebook's fourth-quarter revenue - which jumped 54% to $27.6bn - came from adverts on its social network. |
| "Facebook had another stellar quarter, delivering record revenue, user growth and profitability, as it rides the shift of advertising to online," said Martin Garner, a senior analyst at CCS Insight. | "Facebook had another stellar quarter, delivering record revenue, user growth and profitability, as it rides the shift of advertising to online," said Martin Garner, a senior analyst at CCS Insight. |
| "However it expects advertising growth to slow in 2017, so it expects to be less profitable this year." | "However it expects advertising growth to slow in 2017, so it expects to be less profitable this year." |
| Fake news | Fake news |
| Other challenges that Facebook face this year include a changing approach to privacy in Europe, an uncertain business landscape in the US and challenges in China, Mr Garner said. | Other challenges that Facebook face this year include a changing approach to privacy in Europe, an uncertain business landscape in the US and challenges in China, Mr Garner said. |
| The social network has also been widely criticised after some users complained that fake news on its platform had influenced the US presidential election. | The social network has also been widely criticised after some users complained that fake news on its platform had influenced the US presidential election. |
| In a call with analysts on Wednesday, Facebook executives signalled it would tackle the problem through the use of more artificial intelligence. | In a call with analysts on Wednesday, Facebook executives signalled it would tackle the problem through the use of more artificial intelligence. |
| They also said many of Facebook's new users were in India, where telecoms operators had offered free data packages for Facebook traffic. | They also said many of Facebook's new users were in India, where telecoms operators had offered free data packages for Facebook traffic. |
| For the full year, Facebook grew its net profit by 177% to $10.2bn. | For the full year, Facebook grew its net profit by 177% to $10.2bn. |