The deal that would officially bring Oculus VR under the helm of Facebook after a $2 billion acquisition last month has yet to close. But both the virtual reality headset maker and its soon-to-be owner are facing a complicated legal challenge from ZeniMax, the former employer of a high-profile Oculus member -- Id Software co-founder and Oculus Chief Technology Officer John Carmack.
The claim: Carmack took VR secrets locked down by a May 2012 non-disclosure agreement and shared them with Oculus and its founder Palmer Luckey before and after Carmack joined Oculus, according to a report published by The Wall Street Journal on Thursday.
ZeniMax Media owns Id Software, the game development studio that made Carmack an industry legend when it revolutionized the first-person shooter with video games Doom and Quake. Up until November 2013 Carmack was still employed by ZeniMax as a programmer, despite having taken the position of Oculus CTO in August 2013.
The plan was to have Carmack stay on-board at both companies, but after ZeniMax reportedly did not want Carmack working on virtual reality at the company, Carmack resigned from Id Software to become a full-time member of Oculus.
Following the Facebook deal on March 25, 2014, ZeniMax is now claiming -- via two letters, one sent to Facebook and Oculus each -- that the Rift developer kit uses proprietary tech -- both hardware prototypes and software -- that Carmack developed while he was a ZeniMax employee. The claim puts a wrench in the gears of both the closing of the Facebook acquisition deal as well as Oculus' road map to bring a consumer-model VR headset to market. The letters, which are not publicly available were obtained by the Journal.
"ZeniMax provided necessary VR technology and other valuable assistance to Palmer Luckey and other Oculus employees in 2012 and 2013 to make the Oculus Rift a viable VR product, superior to other VR market offerings," ZeniMax said in a statement. "The proprietary technology and know-how Mr. Carmack developed when he was a ZeniMax employee, and used by Oculus, are owned by ZeniMax."
Oculus is denying the claim. "It's unfortunate, but when there's this type of transaction, people come out of the woodwork with ridiculous and absurd claims. We intend to vigorously defend Oculus and its investors to the fullest extent," the company said in a statement. Carmack was more blunt on Twitter.
No work I have ever done has been patented. Zenimax owns the code that I wrote, but they don't own VR.
-- John Carmack (@ID_AA_Carmack) May 1, 2014
Oculus uses zero lines of code that I wrote while under contract to Zenimax.
-- John Carmack (@ID_AA_Carmack) May 1, 2014
While it sounds like the kind of slimy legal cash grab you'd most likely associate with a standard tech industry patent troll, ZeniMax has a stronger legal argument -- namely the NDA signed by Luckey and Id Software -- than one might think from gleaning the back-and-forths. In fact, ZeniMax was seeking compensation as early as August 2012 for its role in helping Oculus move from Luckey's University of Southern California research to a blockbuster Kickstarter project, and then onward to an eye-popping $2 billion acquisition and soon-to-be consumer product.
"It was only through the concerted efforts of Mr. Carmack, using technology developed over many years at, and owned by, ZeniMax, that Mr. Luckey was able to transform his garage-based pipe dream into a working reality," ZeniMax said in a statement provided to The Wall Street Journal.
Back in 2012, Luckey sent an early prototype of the Rift to Carmack, who then developed a prototype and new software for a virtual reality headset and showed it off at ZeniMax's booth at the Electronic Entertainment Expo in June 2012. Oculus launched its Kickstarter three months later and raked in $2.4 million, shooting past its $250,000 goal. ZeniMax is claiming that the prototype -- a pair of ski goggles affixed to computer components with duct tape -- served as the basis for the Rift.
The May 2012 NDA was written up to exclusively lay down rules by which Carmack could share his VR work and says that Oculus "shall not acquire hereunder any right whatsoever to any proprietary information ... nothing in this agreement is intended or shall be construed as a transfer, grant, license, release or waiver of any intellectual property rights in any proprietary information," according to a copy of the agreement obtained by Recode.
Three months after Luckey signed the NDA, and a month before the Kickstarter launch, Oculus even offered ZeniMax equity, but those negotiations fell through.
It's worth noting that ZeniMax is not claiming that Oculus is violating any VR patents it owns, but rather that the design and development of the Rift headset was substantially aided by Carmack's work, which is owned by ZeniMax. This could make it a murky legal argument. It's not necessarily about the money Oculus has been making -- the company has thus far made about $25.5 million off its Rift developer kits, Recode reports -- but rather could have implications involving future consumer models.
Given the legal intricacies involved, the complex timeline of events, and the fact that Carmack and five other ZeniMax employees are now working for Oculus, this could very well be a defining legal fight for Luckey, Carmack and Oculus, as well as Facebook. But without patents on ZeniMax's part and Carmack's defiant defense of his actions, there will have to be something more concrete than a claim of a violated NDA to substantiate the case that the Rift was developed using stolen tech.