VICTORY for Palmer Luckey over six-year lawsuit involving Oculus development

Barring any further appeal, Luckey is looking forward to the "true closing of the chapter."

Nick Monroe Cleveland Ohio

Embattled Oculus founder Palmer Luckey is ready to move on in life following a legal victory fighting off allegations over claims of breach of contract and fraud involving headsets he made a decade ago.

A Hawaiian company called Total Recall Technologies LLC (TRT) sued Luckey and Facebook in May 2015. Six and a half years later, the findings of a jury cleared Luckey on the basis of lack of sufficient evidence from TRT.

The claim by Total Recall Technologies (TRT) was that Palmer Luckey had lied about progress on virtual reality headset work that the company contracted him to create.

Earlier this month, a San Francisco jury exonerated Luckey in the lawsuit, as they responded no to three questions:

  1. "Has plaintiff TRT proven that Luckey breached his contractual obligation to TRT and that this breach was a substantial and foreseeable factor in causing TRT’s harm?"
  2. "With respect to plaintiff’s claim of constructive fraud, has plaintiff proven that Luckey and TRT were in a confidential relationship (within the meaning of the final charge to the jury)?"
  3. "Has plaintiff TRT proven that Luckey committed constructive fraud?"

The situation came down to an agreement in 2011 between Thomas Seidl of TRT and Palmer Luckey. Seidel provided roughly $800 to purchase parts, and in return Luckey built prototype headset models to send back.

Facebook Technologies LLC was roped into the lawsuit alongside Luckey. At one point during the litigation process, they brought attention to the fact this was over a situation predating the March 2014 acquisition of Oculus.

It wasn’t even Thomas Seidl that brought this lawsuit up. It was another partner at TRT, Ron Igra. This issue of authority was what led the Ninth Circuit Court of Appeals in June 2020 to reverse a previous summary judgement in Palmer Luckey’s favor. Ultimately, since Seidl left the company himself, Igra had the wherewithal to sue.

A main argument provided by the defense in earlier court filings is that these particular pieces of headgear were entirely separate from what became the Oculus. From their express purposes (the TRT work wasn’t intended for gaming) and the number of lenses and panels used in one of the designs.

When it comes to the contractual lingo at play — key elements worked against TRT — the exclusivity arrangement expired after June 2012 because Thomas Seidl didn’t move forward with commercializing Luckey’s work.

"Interpreting the no-aid restraint to cover all designs in Luckey's workshop, including the Rift, regardless of whether they were reasonably suitable for Seidl's purpose, would have been an unreasonable restraint of trade and competition," Judge William Alsup wrote in his memorandum.

There's a few reasons why Luckey is sour on the establishment media. When it comes to the TRT trial itself he said he didn't want to jeopardize the case in any way beforehand by talking about it to the press.

Luckey added that he's likely making a long-form blog post because he believes there "are a lot of things I think other entrepreneurs could learn" from what he experienced.

On further background, 2016 was a hectic year for the Oculus founder. The first customer-ready versions of both the Rift and the competing HTC Vive launched within weeks of each other earlier on that year.

However, it was in September 2016 that the Daily Beast accused Luckey of helping fund a "dirty meme" group. The reality of it was he donated $10,000 for a single anti-Hillary Clinton billboard in the lead-up to the election.

In a later interview the Oculus inventor had confirmed the media fallout cost him his position at the company.

Now the tables have turned. Facebook CEO Mark Zuckerberg is currently facing a whirlwind of scrutiny as a dozen media outlets are publishing "The Facebook Papers." A collection of reports sourcing leaked material provided by whistleblower Frances Haugen highlighting the inner workings of content moderation.

It doesn’t shy away from blaming Zuckerberg as responsible for company failures.

In light of that, I asked about how Palmer feels about Facebook as of today.

"Oculus is still the leader of the VR industry. I would be running things a bit differently if I was still running the show, but as someone who started out in their garage with a dream of bringing VR to the masses, it is hard to be too cynical when it is actually happening."

After Facebook, Luckey started a technology company that makes AI-powered drones for the American military.


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