Case 3:15-cv-02281-WHA Document 523 Filed 10/10/21 Page 1 of 20
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`QUINN EMANUEL URQUHART &
`SULLIVAN, LLP
`ROBERT W. STONE (SBN 163513)
`(robertstone@quinnemanuel.com)
`BRIAN C. CANNON (SBN 193071)
`(briancannon@quinnemanuel.com)
`555 Twin Dolphin Drive, 5th Floor
`Redwood Shores, California 94065-2139
`Telephone: (650) 843-5000
`Facsimile: (650) 849-7400
`
`MICHAEL D. POWELL (SBN 202850)
`(mikepowell@quinnemanuel.com)
`50 California Street, 22nd Floor
`San Francisco, California 94111-4788
`Telephone: (415) 875-6600
`Facsimile: (415) 875-6700
`
`Attorneys for Plaintiff
`TOTAL RECALL TECHNOLOGIES
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN FRANCISCO DIVISION
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`TOTAL RECALL TECHNOLOGIES,
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`Plaintiff,
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`PALMER LUCKEY & FACEBOOK
`TECHNOLOGIES, LLC (F/K/A
`OCULUS VR, LLC),
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`vs.
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`Defendants.
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` CASE NO. 3:15-CV-02281-WHA
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`PLAINTIFF TRT’S OPPOSITION TO
`DEFENDANTS’ MOTION FOR JUDGMENT
`AS A MATTER OF LAW
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`Judge: The Honorable William Alsup
`Courtroom: 12
`Pre-Trial Conf.: September 29, 2021, 1:00 PM
`Trial Date: October 4, 2021
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`Case No. 15-CV-02281-WHA
`PLAINTIFF TRT’S OPPOSITION TO DEFENDANTS’
`MOTION FOR JUDGMENT AS A MATTER OF LAW
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`06533-00001/13000966.2
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`Case 3:15-cv-02281-WHA Document 523 Filed 10/10/21 Page 2 of 20
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`I.
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`II.
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`TABLE OF CONTENTS
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`Page
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`INTRODUCTION ..................................................................................................................1
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`BREACH OF CONTRACT ...................................................................................................2
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`A.
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`Luckey Breached His Agreement With TRT .............................................................2
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`1.
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`2.
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`3.
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`Luckey should not have marketed the Rift HMD design without
`TRT ................................................................................................................2
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`Luckey should not have shared TRT design details on MTBS ......................3
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`Luckey should have sent TRT the Rift prototype ..........................................5
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`B.
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`Luckey’s Breaches Caused TRT Harm ......................................................................6
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`III.
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`CONSTRUCTIVE FRAUD ...................................................................................................7
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`A.
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`B.
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`C.
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`D.
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`E.
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`Luckey And Seidl Have A Confidential Relationship ...............................................7
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`None Of Defendants Cases Address The Specifics Of This Case ...........................10
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`The Jury Has Sufficient Evidence To Find Luckey and Iribe Committed
`Fraud .........................................................................................................................11
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`TRT Reasonably Relied On Defendants’ Fraud ......................................................13
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`Defendants’ Fraud Caused TRT Harm .....................................................................14
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`IV.
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`FACEBOOK TECHNOLOGIES SHOULD NOT BE DISMISSED ..................................14
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`V.
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`VI.
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`UNFAIR COMPETITION LAW .........................................................................................16
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`CONCLUSION ....................................................................................................................16
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`06533-00001/13000966.2
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`Case No. 15-CV-02281-WHA
`PLAINTIFF TRT’S OPPOSITION TO DEFENDANTS’
`MOTION FOR JUDGMENT AS A MATTER OF LAW
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`Case 3:15-cv-02281-WHA Document 523 Filed 10/10/21 Page 3 of 20
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`TABLE OF AUTHORITIES
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`Cases
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`Page
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`Cleveland v. Johnson,
`209 Cal. App. 4th 1315 (2012) ...................................................................................... 14, 15
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`Magic Leap, Inc. v. Chi Xu,
`202 WL 3268659 (N.D. Cal. June 17, 2020) ...................................................................... 13
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`Mattel, Inc. v. MGA Entm’t, Inc.,
`616 F.3d 904 (9th Cir. 2010) ................................................................................................. 7
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`Perez v. Van Groningen & Sons,Inc.,
`41 Cal. 3d 962 (1986) .......................................................................................................... 15
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`Calif. Civ. Code, § 2310 .................................................................................................................. 15
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`Calif. Civil Code §§ 1709-10 .......................................................................................................... 11
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`Statutes
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`06533-00001/13000966.2
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`ii
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`Case No. 15-CV-02281-WHA
`PLAINTIFF TRT’S OPPOSITION TO DEFENDANTS’
`MOTION FOR JUDGMENT AS A MATTER OF LAW
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`Case 3:15-cv-02281-WHA Document 523 Filed 10/10/21 Page 4 of 20
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`I.
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`INTRODUCTION
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`Defendant Palmer Luckey seeks judgment as a matter of law on Total Recall
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`Technologies’ (“TRT”) breach of contract claim despite overwhelming evidence that Luckey
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`breached his contractual obligations to TRT by failing to deliver one of the two prototypes he
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`promised to TRT—the one prototype that Luckey built during his eighteen month relationship
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`with TRT that even came close to meeting all of TRT’s criteria: the Rift. Defendants further seek
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`judgment as a matter of law on TRT’s constructive fraud and unfair competition claims despite
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`overwhelming evidence that (a) Luckey was not only TRT’s agent but that he and TRT had
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`entered into a confidential relationship sufficient to support its claims; and (b) Luckey fraudulently
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`concealed (i) his work on the Rift, (ii) John Carmack’s interest in the Rift and proposed use
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`thereof; (iii) Luckey’s plans and steps taken to organize Oculus LLC and commercialize the Rift,
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`as well as his and Iribe’s joint efforts to (i) formalize the organizational structure of Oculus after
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`June 30, 2012 (where TRT should have been the business organization being capitalized or a co-
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`founder thereof), (ii) assign the Rift to Oculus (when TRT was the rightful owner of the Rift), (iii)
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`launch a Kickstarter campaign for the Rift Development Kit (which was a derivative of the Rift to
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`which TRT held exclusive rights), and (iv) eventually initiate and close a seed round of financing
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`for Oculus (in which TRT should have been the entity receiving the seed financing or been an
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`equity participant therein).
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`By unlawfully usurping the opportunity to commercialize the Rift and its progeny,
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`Defendants have caused TRT significant harm including the lost opportunity to (i) enjoy the
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`momentum of John Carmack’s endorsement of the Rift to attract additional talent to TRT to round
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`out its management team, (ii) launch and complete a successful Kickstarter, (iii) pursue,
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`participate in, and close a seed financing round where TRT would have invested additional capital
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`to secure a higher percentage ownership in the business pursuing the Rift, (iv) pursue and close
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`additional venture capital financing rounds to fund operations and research and development
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`necessary to fuel the growth of the business, (v) the first to market with a consumer head-mounted
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`display (“HMD”) with TRT’s stated criteria, and/or (vi) be introduced to Mark Zuckerberg and
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`ultimately sell the company to Facebook for $3 billion.
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`Case No. 15-CV-02281-WHA
`PLAINTIFF TRT’S OPPOSITION TO DEFENDANTS’
`MOTION FOR JUDGMENT AS A MATTER OF LAW
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`Case 3:15-cv-02281-WHA Document 523 Filed 10/10/21 Page 5 of 20
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`II.
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`BREACH OF CONTRACT
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`A.
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`Luckey Breached His Agreement With TRT
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`Luckey breached his agreement with TRT by disclosing details of the designs he was
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`building for TRT (such as the Rift) on the Meant to be Seen (“MTBS”) forum, by failing to send
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`the Rift prototype to TRT, and by working to commercialize the Rift on his own and with Oculus.1
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`These unauthorized actions were either (i) in breach of Luckey’s promise in December 2010 to
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`work with TRT to bring to market a commercial HMD; (ii) in breach of Luckey’s duty to take
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`such care as necessary to keep his designs for TRT eligible for an exclusive license; or (iii) in
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`breach of his duty to design and deliver in good faith a single panel prototype with a horizontal
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`field of view of at least 100 degrees.
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`1.
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`Luckey should not have marketed the Rift HMD design without TRT
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`Luckey and Seidl agreed in December 2010 to work together to bring a commercial HMD
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`to market. TX-0170; Tr. at 677:17-678:3; 688:16-689:10. Despite Luckey’s promises, he initially
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`1 Defendants’ effort to make “not for gaming” a TRT criteria is not supported by the record
`evidence. Luckey never asks whether the HMD will be used for gaming. Rather, in response to a
`question by Luckey about how important is size relative to weight, Seidl volunteers that because
`he will not be using it for gaming the prototype will not need to endure violent quick moves. TX-
`0108.0007. Of course, because low-latency head tracking was one of TRT’s criteria (id.), the
`prototype had to anticipate considerable head movement. Luckey’s trial testimony that Seidl
`repeatedly told him the device was not for gaming is simply not corroborated in the extensive
`written record. Rather, the contemporaneous evidence shows that other than the December 14,
`2010 email (TX-0108), Seidl did not even tell Luckey what the intended use was—for viewing
`360-degree 3D camera content—until AFTER the contract was executed. TX-0125.0020 (“At
`last [on August 15, 2011] some info for you below. We have developed a 360 3D video lens
`array.”) Luckey admits that he had that information AFTER the contract was signed: “Does this
`refresh your recollection that, in fact, he was telling you for the first time on August 15, 2011, that
`TRT had developed a 360 3D video lens array? A. Yes.” Tr. at 754:6-9; see also id. at 10-18. Of
`course, Luckey specified and bought all of the parts for the HMD months and months earlier in
`April 2011 including the three Vitrolight Hydis panels BEFORE he even knew what the intended
`use case was. See Stip. Fact No. 12; TX-0202; Tr. at 752:8-753:10. After Seidl first disclosed he
`camera, the MK1 was nearly finalized and was shipped to Seidl just days later—in fact, Luckey
`told Seidl on August 17, 2011: “As far as the edges of the screen, I will see what I can do. I have
`already finalized most of the build for this prototype, so changes are tough” TX-0125.0007.
`Luckey admitted at trial that Seidl had not told him about the camera before August 15, 2011. See
`755:11-25. Thus, no evidence suggests that modifications were necessary to adapt the general
`purpose HMD for use with pre-recorded video.
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`Case No. 15-CV-02281-WHA
`PLAINTIFF TRT’S OPPOSITION TO DEFENDANTS’
`MOTION FOR JUDGMENT AS A MATTER OF LAW
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`Case 3:15-cv-02281-WHA Document 523 Filed 10/10/21 Page 6 of 20
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`sought in April 2012 to bring the Rift—the only commercial HMD he built between December
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`2010 and July 1, 2012 that satisfied TRT’s specified criteria—to market on his own. See, e.g., TX-
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`0204 (“Oculus ‘Rift’: An open-source HMD for Kickstarter”). He eventually brought it to market
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`with his co-founders, including Brendan Iribe, through a Kickstarter campaign under the Oculus
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`moniker. TX-0590.
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`2.
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`Luckey should not have shared TRT design details on MTBS
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`Luckey testified at trial that he had a “moral imperative” to breach his contract with TRT
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`by sharing the details of “all” of “[his] designs and work” on the MTBS forum. Tr. at
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`1128:1129:8. Mr. Luckey said it would be antithetical to the community—the Meant To Be Seen
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`community where even the name suggests nothing will be kept secret—to work on any virtual
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`reality projects without sharing details. Id. (“The idea was that if we all shared what we were
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`learning and we all shared our projects and we all shared what worked and what didn't work, that
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`we would all collectively be able to accomplish things that none of us working in secret could
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`ever work on.”) The “geek moral code” that Mr. Luckey lived by implored him to “build[] in the
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`open.” Id. There really is nothing else to prove: Luckey’s philosophy is that he was morally
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`obligated to post “about all of his different ideas” on the MTBS forum. This is why the same
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`work he offered to TRT—designs he was working on for TRT under a nondisclosure agreement—
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`ended up on the MTBS forum. Yet he did not share this information with the party he was bound
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`to by contract—TRT.
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`The designs offered to TRT and also shared publicly on the MTBS forum in breach of
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`Luckey’s agreement with TRT include both the 110- and the 270-degree prototypes. Compare
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`TX-0108.11 (“FOV would be around 100 degrees, resolution would be 1280x800, minus a few
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`pixels since you do not want the edges of the image visible.”); TX-0127; TX-0017.0033
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`(“Prototype wise, would the 110 degree or the 270 degree be better for showing off to the potential
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`investors? The 270 one is close to completion, but will probably not be done till early March. 110
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`degree is just one panel.”); Tr. at 1189:4-9 (offering it to Seidl) with TX-0302 (“PR2, a DIY, low
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`cost, high FOV stereoscopic HMD”); TX-0301 (Private message from John Carmack to Palmer
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`Luckey with message subject “PR2”); Tr. at 974:2-4; 974:14-975:3 (Carmack asked for high Field
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`Case No. 15-CV-02281-WHA
`PLAINTIFF TRT’S OPPOSITION TO DEFENDANTS’
`MOTION FOR JUDGMENT AS A MATTER OF LAW
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`Case 3:15-cv-02281-WHA Document 523 Filed 10/10/21 Page 7 of 20
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`of View (“FOV”) prototype with message subject PR2 referencing TX-0302: “Q. And is it fair to
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`say that when you messaged Palmer Luckey you were asking him to send you the high FOV HMD
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`that is described in this post or this series of posts? A. I was hoping to get access to it one way or
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`the other, or something like that.”); TX-0204 (Oculus “Rift” An Open Source HMD for
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`Kickstarter); TX-0175 (first post on oculusvr.com).
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`While the evidence of the design details shared with Seidl and later posted on MTBS is
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`compelling evidence of Luckey’s breach, the evidence most probative of whether the Rift design
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`is a TRT design that was wrongfully disclosed on MTBS and elsewhere is the overwhelming
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`circumstantial evidence pointing to the inevitable conclusion that TRT’s third Vitrolight (BOE)
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`Hydis 5.6 inch LCD panel is in the Rift device that Luckey built for TRT but wrongfully sent to
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`John Carmack. For instance, Luckey admits that when confronted by Seidl about the apparent
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`misuse of TRT’s parts in building other prototypes (TX-0017.0035), and despite the fact that
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`Luckey knew that Seidl believed Luckey had only purchased two LCD panels, he concealed from
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`Seidl the true facts that he had purchased three LCD panels for TRT. Tr. at 1185:14-20 (Q. He
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`wrote: I paid for two panels, yes? A. Yes. Q. And you said: Those are both in my possession;
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`yes? A. Yes. Q. And you didn’t tell him, in fact, that he paid for three, right? A. No.”); see also
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`Tr. at 850:17-20.
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`In fact, Luckey never told Seidl that he had purchased three panels. Tr. at 1184:14-18 (“Q.
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`And you bought three panels; right? A. Yes. Q. But you never told TRT in writing that, in fact,
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`you actually had bought three panels, did you? A. No, not explicitly.”) And throughout
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`discovery in this case, including in response to Court Ordered Interrogatories, Luckey consistently
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`maintained that he had purchased only two panels:
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`Luckey used the money received from Seidl to order parts to make an HMD for Seidl. He
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`ordered two of several components (including two panels and spare lenses) to account for
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`potential component failure.
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`See TX-0101.0008; see also TX-0730.0010.
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`Deep in the hundreds of thousands of pages produced by Defendants, Luckey produced
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`business records showing he actually acquired a total of four Vitrolight (BOE) Hydis 5.6 inch
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`Case No. 15-CV-02281-WHA
`PLAINTIFF TRT’S OPPOSITION TO DEFENDANTS’
`MOTION FOR JUDGMENT AS A MATTER OF LAW
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`

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`Case 3:15-cv-02281-WHA Document 523 Filed 10/10/21 Page 8 of 20
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`displays during the relevant time periods—one in 2010 (that went into the PR1 which Luckey
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`gave away (compare TX-0141 (PR1 used Vitrolight Hydis) with Tr. at 1127:13-17)) before Seidl
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`and Luckey met, and three in April 2012 just after TRT had sent Luckey the $798. See TX-0202;
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`TX-0908. And while Mr. Luckey testified that he had purchased others, this self-serving
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`testimony is uncorroborated. There is no record documentary evidence that Luckey purchased any
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`additional Vitrolight Hydis panels during the relevant time period, and Luckey’s repeated lies to
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`Seidl and in discovery are compelling circumstantial evidence that no more were bought.
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`Furthermore, Luckey did not have funds to acquire any additional panels during the relevant time
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`periods. See, e.g., Tr. at 1120:25-10. In fact, because the Rift that Luckey sent to John Carmack
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`(which contained a Vitrolight Hydis panel (See TX-141; see also Tr. at 901:4-11; Tr. at 901:23-25
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`(Luckey discussing TX-0141 “Q. And you were saying under oath that it [Rift] had a 5.6 inch
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`LCD Vitrolight Hydis display; yes? A. That’s what it says.”)) was the only one that Luckey had
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`(TX-0139 (“The prototype Carmack showed at E3 was a handbuilt one I had laying around, and
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`my only one at that …”); Tr. at 903:21-23 (“Q. Now, the Rift device that you sent to Mr. Carmack
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`was the only Rift device that you had; yes? A. Yes, at that point in time.”)), even after the E3
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`showing of the Rift, Brendan Iribe had to lend Luckey “a few thousand dollars” so he could build
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`another Rift prototype. Tr. at 904:3-9 (Q: And in fact Mr. Iribe had to give you money to
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`purchase parts to build another prototype; yes? A. To build one for him, yes. Q. And he ultimately
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`gave you a check for some money; yes? A. Yes.”); ZeniMax Iribe Testimony, February 4, 2016 at
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`52:10-13. Luckey’s testimony is simply not credible on this point. Consequently, the jury could
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`reasonably find that TRT’s parts are in the Rift.
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`3.
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`Luckey should have sent TRT the Rift prototype
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`Luckey promised TRT a single panel HMD with at least a 100-degree field of view. TX-
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`0108.0011. The MK1 prototype did not meet TRT’s criteria because its FOV was worse than
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`Headplay which had a horizontal FOV of 30 degrees. See TX-0125; see also TX-0017.0039
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`(Luckey telling Seidl that Headplay had 34 degree diagonal FOV and 30 degree horizontal FOV).
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`At trial, Luckey testified that he offered a single-panel HMD with a 110-degree field of view to
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`Seidl because it was “part of the work [he] was doing for him.” Tr. at 1189:4-9. Seidl, however,
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`Case No. 15-CV-02281-WHA
`PLAINTIFF TRT’S OPPOSITION TO DEFENDANTS’
`MOTION FOR JUDGMENT AS A MATTER OF LAW
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`Case 3:15-cv-02281-WHA Document 523 Filed 10/10/21 Page 9 of 20
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`believing TRT had paid for only two panels asked to see the 270-degree HMD first. TX-
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`0017.0033-35. Had Luckey ever told TRT the truth—that TRT had actually paid for three
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`panels—then Seidl could and would have asked for both HMDs for comparison purposes.
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`Instead, Luckey withheld this information so that he could continue working on his own projects
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`using TRT’s parts as well as “sharing” his ideas and projects on MTBS in breach of his duty to
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`deliver a single-panel HMD with 100-degree FOV to TRT.
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`B.
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`Luckey’s Breaches Caused TRT Harm
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`By breaching his agreement with TRT, Luckey caused TRT to miss out on the profits to be
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`earned from commercializing the Rift.2 Had Luckey not breached his agreement with TRT,
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`TRT—rather than Luckey and Oculus— would have had the option to offer either the Rift or the
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`270-degree HMD to John Carmack in April 2012.3 See, e.g., TX-0310 (April 10, 2012 private
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`message from Luckey to Carmack offering him the Rift and the 270 degree prototype). From that
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`point forward, absent Luckey’s breaches, Luckey and TRT would have pursued the Rift
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`commercial HMD opportunity in the same manner as actually happened except that their
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`2 Defendants’ assertion that nonpayment of the $10,000 in royalties preempts causation is
`misplaced. As the Court has noted in its draft jury charge, a breach by Luckey prior to June 30,
`2012 will excuse TRT’s failure to pay the $10,000 in royalties. Dkt. 515-1, ¶ 45. Moreover, the
`pre-delivery duties imposed under the parties agreement provide that TRT shall have a reasonable
`time after delivery of a prototype for considering whether to exercise the option for an exclusive
`license. Id., ¶ 31. Had the Rift been delivered to TRT or had TRT been informed of the Rift in
`late May or June, a reasonable time for its evaluation would likely have extended beyond June 30,
`2012, and thus it is reasonably likely that the parties would have agreed that exclusivity would be
`extended for another twelve months or some other time sufficient to allow TRT time to commence
`manufacturing, marketing and, sale of the Rift. Otherwise, Luckey’s tardy delivery would wholly
`destroy the stated purpose of the initial exclusivity period (to have sufficient time to generate sales
`resulting in a minimum royalty of $10,000).
`
`3 Luckey has not pled an affirmative defense under Business & Professions Code section 16600.
`Dkt. No. 129. Moreover, after both sides had finished presenting evidence at trial, counsel for
`Luckey confirmed he was not asserting any affirmative defense other than fraudulent inducement.
`Tr. at 1217:24-1281:1. In addition, Luckey has never asserted Section 16600 is applicable to the
`April 8 agreement. And finally, because Luckey offered the 110-degree single-panel prototype
`(which the evidence shows later became the Rift) to TRT, there can be no issue vis-à-vis Section
`16600 as any applicable restrictive covenant is necessarily limited to the designs Luckey was
`building for TRT. Dkt. 427 at 21 (implying that the rule of reason permits a restraint limited to the
`“designs made for Seidl’s consideration”).
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`Case No. 15-CV-02281-WHA
`PLAINTIFF TRT’S OPPOSITION TO DEFENDANTS’
`MOTION FOR JUDGMENT AS A MATTER OF LAW
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`

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`Case 3:15-cv-02281-WHA Document 523 Filed 10/10/21 Page 10 of 20
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`
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`respective shares of any profits (including gains from equity appreciation) would have been split
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`97.5% to TRT and 2.5% to Luckey as agreed. TX-0100. It is reasonably likely that Luckey,
`
`Seidl, and Igra would have been introduced to Brendan Iribe following the successful
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`demonstration of the Rift at E3 in early June 2012. Thereafter, the dinner at the STK steakhouse
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`is reasonably likely to have still taken place as it did except that Seidl and/or Igra would have been
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`there too as the managing agents of TRT, holding the exclusive rights to the Rift. ZeniMax Iribe
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`Testimony, February 4, 2016 at 50:9-13. Absent Luckey’s breaches, therefore, TRT could have
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`become Oculus or at least would have been a significant equity participant in Oculus as a co-
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`founder in July 2012 (entitled to at least 97.5% of the 160,000 shares Luckey was granted) and/or
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`as a seed-round investor in September 2012 (entitled to at least the 90,000 shares Iribe purchased
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`for roughly $700,000).4 TX-0247 (September 26, 2012 Oculus VR Class A Common Stock
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`Financing).
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`III. CONSTRUCTIVE FRAUD5
`
`A.
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`Luckey And Seidl Have A Confidential Relationship
`
`The following facts evidencing a confidential relationship were adduced at trial:
`
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`4 Defendants reliance on Mattel, Inc. v. MGA Entm’t, Inc., 616 F.3d 904, 911 (9th Cir. 2010) is
`misplaced. Dkt. 519 at 24. Luckey’s agreement with TRT is not analogous to the fraudulent
`acquisition of paint used in producing a valuable portrait. Rather, the situation here is more akin
`to investor who hires Monet to paint two masterpieces—one a 12x12 inch square and the other a
`24x36 inch rectangle—both depicting Tuscan landscapes, and Monet instead delivers a first
`painting on a 12x12 inch canvas of a cityscape which the investor returns to Monet, who
`thereafter paints a stunning 12x12 inch Tuscan landscape and a 48x60 Tuscan landscape in the
`style of Picasso (crazy angles) but unbeknownst to the first investor offers both to a second
`investor who promises to display the art in a famous gallery. And when the second investor
`choses the stunning 12x12 Tuscan landscape and shows it in his gallery, it receives a purchase
`offer for $2.4 million. Meanwhile, Monet sends the 48x60 Tuscan landscape in the style of
`Picasso to the first investor who upon receipt discovers it is not remotely what he had originally
`asked for. Monet goes into business with the second investor and never delivers the promised
`12x12 Tuscan landscape.
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`5 TRT reasserts its position that vulnerability is not an express requirement in proving a
`confidential relationship for purposes of prevailing on a claim of constructive fraud. Dkt. 497.
`TRT further reasserts its position that it did not waive its assertion that Luckey was TRT’s agent
`and thus in a fiduciary relationship with TRT. Dkt. 498.
`
`7
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`
`
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`Case No. 15-CV-02281-WHA
`PLAINTIFF TRT’S OPPOSITION TO DEFENDANTS’
`MOTION FOR JUDGMENT AS A MATTER OF LAW
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`
`

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`Case 3:15-cv-02281-WHA Document 523 Filed 10/10/21 Page 11 of 20
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` Luckey was retained by TRT to design and deliver two novel head mounted display
`prototypes in compliance with TRT’s specified criteria. See, e.g., Dkt. 427; Tr. at 257:15-
`258:19; 264:17-265:15; 531:10-17; 551:6-552:2; 552:10-22; 555:18-556:20; 697:18-699:3;
`699:11-700:20; 701:1-3.
` Luckey contacted Seidl based on Seidl’s request for someone with expertise in building
`HMDs with high field of view. See, e.g., TX-0005 (Seidl: “If you get a good design with
`some high res high FOV HMD, please let me know. . . . If anyone has any solutions ideas
`please PM or write to me here.”); TX-0107 (Luckey to Seidl: “I am interested in working
`with you to bring a commercial HMD to market. . . . I have made a high FOV, high
`resolution HMD before, and I can do it again.”); Tr. at 253:12-254:15; 256:5-19; 258:6-19;
`685:19-686:9; 688:16-689:18.
` Luckey was to bring his superior knowledge, experience, and skill in the field of head
`mounted display design and development to bear on the project. See, e.g., TX-0116.0002,
`passim; Tr. at 249:9-16; 256:10-257:6; 261:19-262:1; 316:14-21; 922:13-923:6.
` Luckey repeatedly touted his experience, expertise, and ability to build “high FOV”
`HMDs. See, e.g., TX-0108.0004-5 (Luckey: “The 95 degree field of view would let you
`see the edges of the screen.”; Seidl: “we do not want to see the edges is this possible?”;
`Luckey: “I can easily make it so you cannot see the edges.”); TX-0110.0003 (Seidl asks:
`“Do you have an idea what the resolution and FOV would be of your prototype.”; Luckey
`responds: “FOV would be around 100 degrees, resolution would be 1280x800, minus a
`few pixels since you do not want the edges of the image visible.”); TX-0117.0001-2
`(Luckey: “The quality of this panel is much, much higher than the Headplay [an existing
`HMD]. . . . I think you will be very happy. The FOV is massive, it fills most of your
`view!”); Tr. 258:6-19; 264:17-265:15; 555:18-557:8; 685:21-686:15; 882:18-883:17.
` Seidl remarked about Luckey’s superior knowledge on numerous occasions regarding
`HMD designs. See, e.g., TX-0116.0002 (“I bow down to your superior knowledge on the
`matter.”); Tr. at 922:13-923:6.
` After detailed communications, Seidl put his trust and repose in Luckey’s integrity and
`ability to build Seidl and his partner Ron Igra a high FOV HMD. Tr. 604:1-9; 271:24-
`272:4. Seidl told his partner Igra that they should spend money to get a prototype that
`Luckey promised where “[y]ou will not be able to see the edges of the screens like on the
`ones we use now and also the screens are much better quality.” TX-0038.0001.
` Luckey was entrusted with TRT’s money and authorized to identify, negotiate terms with,
`and acquire components from third-party prospective suppliers on TRT’s behalf. See, e.g.,
`TX-0108, TX-0110; Tr. 702:7-14.
` Luckey knew that Seidl was putting his trust and confidence in Luckey to build TRT a
`high FOV HMD and that TRT would gain exclusive rights. Luckey agreed to preserve the
`option value of each design he worked on for TRT by keeping it secret and not working on
`it for his own benefit. See, e.g., Dkt. 427; TX-0110.0001 (Seidl: “Just so we are on the
`same page. With the initial payment to you I would like exclusive rights to your design
`unless we decide not to use it. I need to cover myself if we pay for development and then
`end up paying for a competitor.”; Luckey: “Yes, we are on the same page here.”); Tr.
`713:19-716:17 (“Q: And you understood that Mr. Seidl, TRT, did not want to fund a
`competitor; correct? A: That’s right.”) (“Q: Because you kept information about those
`HMDs confidential; is that right? A: That’s right. Q: The ones that you were building with
`TRT’s parts; right? A: Yes. Q: And you didn’t share or build those HMDs for others; is
`that right? A: That’s right.”)
`
`
`8
`
`
`Case No. 15-CV-02281-WHA
`PLAINTIFF TRT’S OPPOSITION TO DEFENDANTS’
`MOTION FOR JUDGMENT AS A MATTER OF LAW
`
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`Case 3:15-cv-02281-WHA Document 523 Filed 10/10/21 Page 12 of 20
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` The Exclusivity Agreement expressly states that the parties “agree to enter into a
`confidential relationship,” and that Luckey “shall keep all details including drawings and
`part suppliers of the Head Mounted Display confidential and shall not aid any other person
`or entity in the design of a Head Mounted Display other than [TRT].” TX-0100.0002; Tr.
`729:3-8; 729:12-731:18.
` That confidential information concerned the commercial HMD designs Luckey developed
`for TRT during the exclusivity period, including the Rift, when TRT did not have access to
`such drawings, or designs, or prototypes during construction. As a consequence, such
`detailed technical information was initially in the exclusive control and possession of
`Luckey, and TRT relied completely on Luckey when designing and selecting/purchasing
`parts for the prototype HMDs. Tr. 604:1-9; 271:24-272:4; 702:7-14 (“Q: Now, Mr. Seidl
`relied on you to figure out the parts for the HMD; right? A: Yes. Q: And you figured out
`the suppliers for the parts that were needed; right? A: Yes. Q: And you negotiated with
`them on TRT’s behalf; correct? Yes.”).
` Luckey was entirely in control of the parts purchased using TRT’s money, as well as the
`timing of sending prototypes, which he continually delayed despite promises otherwise and
`knowing that Seidl was relying on the prototype to raise funds for TRT’s business. See,
`e.g., TX-0017.0069; Tr. at 294:9-295:5; 300:1-322:2.
` With both TRT partners in Hawaii, they were unable to monitor progress of the prototypes
`or compliance with their agreement. See, e.g., Tr. at 233:17-20; 236:11-15; 534:5-9;
`671:23-672:3; 1085:1-6.
` TRT gave Luckey limited authority to work on TRT’s prototypes at the USC virtual reality
`lab and thereby entrusted him to use his judgment to keep the design details confidential
`while working on them at the USC lab. See, e.g., TX-0127; Tr. 295:6-296:17; 787:13-
`789:21.
` TRT controlled the ultimate decision on the features for the commercial HMD prototype
`and gave considerable instruction to Luckey on where t