Wednesday, 15 February 2017 18:02

Oculus Breach of NDA Results in $500m to ZeniMax

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Often clients and attorneys question the value of an extensive NDA, given that its enforceability may be questionable and its cost of enforcement high, as such a case often devolves down to a situation of "he said, she said". However when the stars and the facts align, a properly executed and well defined NDA may prove to be a valuable tool against unauthorized disclosures of confidential information. Case in point, earlier in the month, a jury awarded ZeniMax a $500 million award for copyright infringement, false designation, and breach of a non-disclosure agreement executed between ZeniMax and Oculus co-founder Palmer Luckey. This was less than the $4 billion award ZeniMax originally asked for, but is a substantial judgment against Oculus, especially given that $200 milliion of that award were for the NDA breach alone, where trade secret theft was not found. 

In a software misappropriation case, the 5th Circuit recently held that trade secret misappropriation claims are not preempted by the Copyright Act. In making this ruling, the 5th Circuit joins ten other circuits in establishing an almost-uniform holding across the US.