Last year US District Judge William Alsup told Total Recall Technologies to proceed with a claim of breach of contract against Palmer Luckey.

TRT claimed that Luckey was hired to develop a prototype head-mounted display by the company in 2011. Luckey's crowdfunding campaign for a head-mounted display was rather too like the device TRT hired him to design and build.

According to TRT, Luckey signed a non-disclosure agreement and agreed to providing the company with 'exclusive rights to [Luckey's headset] design unless we decide not to use it'. Luckey broke all these agreements when he went on to develop the Oculus Rift headset.

Judge Alsup has now has thrown out the company's case because one of the two people behind TRT, Thomas Seidl, has refused to authorise the lawsuit.

Seidl, who founded TRT with Ron Igra, was responsible for the written agreement for a prototype head-mounted virtual reality display system around which the lawsuit centres.

When Oculus VR was sold to Facebook, Igra was the one who wanted to sue Luckey for alleged breach of contract however Seidl said no. So Igra filed the suit in Hawaii to force his business partner to get involved.

Now the court has decided that it was not TRT who was acting but rather Igra himself and against his partner's wishes. This is forbidden by the company's founding articles, which gave both partners power of veto regarding all businesses decisions.

Oculus could argue that Igra had no authority to file the suit - an argument the court accepted in June 2016 with the proviso that Igra had until the end of the year to gain proper authorisation.

Igra signed an agreement with Seidl in which Seidl received all assets and intellectual property surrounding the company while Igra received the company name and the rights to the lawsuit against Luckey and Oculus VR but with the agreement of a 30 percent share of any payout for Seidl.

This removed Seidl from the TRT legal entity and thus his power of veto, the court has ruled that his was not enough. It wanted Seidl’s unequivocal authorisation and ratification, this lawsuit remained improper from the outset.

Seidl refused to give the case his blessing and the new Igra plan does nothing, Judge Alsup said,