Comment 4 for bug 1595690

This is definitvely related to the nvidia drivers and gnome 3.18+, at least in my case. Disabled nvidia drivers and gnome3 works great. See here for more detail:
https://askubuntu.com/questions/790347/mouse-stops-working-in-ubuntu-gnome-16-04/805145?noredirect=1#comment1217490_805145