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Oculus' controversial founder to take stand in intellectual property trial

Palmer Luckey
Ramin Talaie | Corbis | Getty Images
Palmer Luckey

In terms of sheer star power, it's going to be hard to top Facebook CEO Mark Zuckerberg's appearance at the trial of virtual reality leader Oculus, but in terms of the outcome of the case, a lot could rest on the testimony of Oculus founder Palmer Luckey.

Luckey is expected to take the stand Wednesday in Zenimax Media's complaint against the VR company. Zenimax alleges that Oculus and its products were created using stolen technology — and that Facebook was aware of this before its 2014 purchase of the company.

Wearing a suit, white shirt and tie, Zuckerberg shrugged off the allegations in his testimony Tuesday, saying "I am here because I believe [these accusations] are false and I think it's important to testify to that." While occasionally confrontational, the Facebook co-founder remained calm under cross-examination, even joking occasionally.

Luckey, though, is seen as more of a wildcard. The founder, whose typical dress style tends to include Hawaiian shirts and flip flops, has been secluded from the public for roughly four months.

He was, however, the public face of Oculus at one time — and liked to shoot from the hip.

In 2015, he famously predicted the Oculus Rift was expected to cost between $300 and $400 — forcing the company to be on the defensive when its $599 price was announced a year later. And when preorders for the unit failed to ship on time due to a technical issue, he went largely silent after tweeting to buyers "stay tuned for future updates."

He did take to Reddit at the time to vent some of his frustrations.

"On the rare occasions when things still change, even when they change for reasons out of my control, I get crucified anyway," he wrote.

Then, last September, The Daily Beast revealed Palmer was a financial backer of a pro-Trump meme posting political advocacy group called Nimble America. As backlash over his actions grew, he posted an apology, then withdrew completely, no longer tweeting, posting on Reddit or granting interviews. He also bypassed the company's Oculus Connect conference, an annual event meant to energize developers working on software for Oculus products.

The now-reclusive Palmer was in the courtroom Tuesday for Zuckerberg's testimony, and appeared to be nervous.

Ultimately, his testimony could be the most critical of the trial, since so much of the debate focuses on his interactions with Zenimax and the early days of his company.

The trial, being argued in the U.S. District Court, Northern District of Texas, is the apex of a long legal fight between Oculus — and Luckey — and Zenimax, the owner of video game developer Bethesda Softworks.

Zenimax maintains Oculus and Luckey "commercially exploited" Zenimax computer code and trade secrets for their own gain. That software, says the company, led to a $3 billion purchase of Oculus by Facebook in March 2014. It is seeking $2 billion in damages.

Analysts are split on the impact a potential win by Zenimax could have.

"Is there the possibility for Facebook to be harmed in some way? Certainly," said Brian Blau, a research vice president focusing on personal technologies at Gartner.

However, because of the secretive nature of technology companies when it comes to source code, it's hard to determine how much of an impact the Zenimax intellectual property, if it was purloined, had on the company's product, said Blau.

Ben Schachter of Macquarie Securities notes that while a Zenimax win could rewrite the history of virtual reality, it would be unlikely to have a significant impact on the industry's future.

"In general, these sorts of things tend to get sorted out, generally by someone writing a check to someone else, then you never head about it again," said Schachter.

Correction: An earlier version of this story misstated Palmer's title at Oculus.

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