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Zenimax officially sues Oculus over virtual reality tech
Zenimax officially sues Oculus over virtual reality tech
May 21, 2014 | By Alex Wawro

May 21, 2014 | By Alex Wawro
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Zenimax Media and its subsidiary id Software filed a lawsuit in federal court today against Oculus VR founder Palmer Luckey and his company over what it claims is unlawful exploitation and infringement of its intellectual property.

"Intellectual property forms the foundation of our business," stated Zenimax CEO Robert Altman in a press release announcing the suit, which was filed today in the U.S. District Court for the Northern District of Texas.

"We cannot ignore the unlawful exploitation of intellectual property that we develop and own, nor will we allow misappropriation and infringement to go unaddressed."

According to a statement released by Zenimax, the lawsuit was filed over what it perceives to be the defendants' illegal exploitation of intellectual property, including "trade secrets, copyrighted computer code, and technical know-how relating to virtual reality technology" that was developed by Zenimax.

Zenimax is also seeking to take Oculus and Luckey to task for breach of contract, unjust enrichment, and unfair competition.

Zenimax continues to claim that it provided IP to Oculus under a legal agreement that it would be owned exclusively by ZeniMax and could not be "used, disclosed, or transferred to third parties without Zenimax's approval."

The company sent legal notice to Oculus earlier this month alleging that it had some claim to the work John Carmack had contributed to Oculus VR while he was still employed at id Software. Oculus fired back a few days later, essentially claiming that everything ZeniMax had asserted was false.

Now, Zenimax is upping the ante by actually taking the case to court.

"Zenimax and id Software take their intellectual property rights seriously," stated P. Anthony Sammi, a partner of the legal firm which represents Zenimax and id in the case. "We now look to the federal courts and will pursue all appropriate measures available under the law to rectify defendants' egregious conduct."

When reached for comment, Zenimax declined to comment further on the lawsuit.

UPDATE: An Oculus representative provided the following statement to Gamasutra in the wake of today's news:

"The lawsuit filed by Zenimax has no merit whatsoever. As we have previously said, Zenimax did not contribute to any Oculus technology. Oculus will defend these claims vigorously."

We've gone ahead and highlighted some of the notable points of Zenimax's lawsuit against Oculus in a separate article.

We've also taken the liberty of publishing the full legal complaint filed by Zenimax below, in which Luckey is cast as a "video game enthusiast" with a "crude prototype" that Zenimax employees "literally transformed...by adding physical hardware components and developing specialized software for its operation."

"Throughout 2012, Oculus and Luckey lacked the necessary expertise and technical know-how to create a viable virtual reality headset," alleges Zenimax. "In the months following E3 [2012], Oculus and Luckey sought that expertise and know-how from Zenimax. Without it, there would not have been a viable Rift product."

ZeniMax v Oculus Complaint_As Filed_21-May-2014



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Comments


George Menhal III
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Yeah, I hope Zenimax gets destroyed when this goes to court.

Dane MacMahon
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Because of facts, or because Oculus is cool tech?

If Carmack did work on Oculus stuff while under contract with Zenimax, had a standard tech industry employment contract and is now using that work in his new job then Zenimax likely have a strong case. We'll have to see what facts come out.

There are no good guys in corporate money wars.

George Menhal III
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I agree with you, Dane. I'm not firing back in a flame war, but I want to point this out:

Section J
"On March 25, 2014, Facebook announced a proposed acquisition of Oculus for $2 billion in cash and stock, thereby confirming the market value of the intellectual property that ZeniMax had provided to Defendants pursuant to the Non-Disclosure Agreement."

That is the only thing Zenimax cares about. Like you said, a corporate money war with no good guys. I don't even consider this to be Zenimax vs Oculus, but Zenimax vs Facebook. If that buyout had never happened, I don't think this lawsuit would even exist.

The claims in the document start at legitimate and go towards outright conspiracy. Did you see the section about "five employees who worked with Carmack simultaneously resigned."

Uhh, yeah. If the heart and soul of my company left, I would strongly consider leaving as well. Meanwhile the developers who are interested in Oculus, the consumers and gamers who are waiting to try it out, and all the Kickstarter backers who funded this thing when it was a dream get to sit by and watch this absurdity unfold.

Daniel Lau
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Certainly you have a point that this lawsuit may not have happened had Facebook not been involved. However, patent lawsuits are very expensive, and this doesn't even have a patent in question. This is about far more technical arguments that are going to require extensive legal work. That being said, many times a company will make a deal with an IP firm (i.e. contingency or patent troll) to share any licensing fees instead of an hourly rate. It may be that prior to the Facebook deal, Zenimax just couldn't get a reputable contingency firm to represent them and, thereby, share the risk of losing the suit.

Marvin Papin
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I think the lawsuit cause is a bit inaccurate that time. The complaint is based on the fact that JC (Carmack not the other one :) made the tech viable. The Oculus famous kickstarter is enough to point out the fact that it was already viable and the infatuation 'til he joined was already Big. I do not cautioned at all when he worked on Oculus tech while still being at IDsoftware but the lawsuit is far from being founded. However, we still need to know about the plans of occulus before carmack began to help (anyway when), but something tell me we will never know.

...

Sad world.

Edit : oups mis'reading'

Michael Wenk
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I think its fairly unlikely this will ever hit trial. Its likely to either get dismissed by summary judgement, or will be settled.

Daniel Lau
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Of course there are always two sides to every story, but there is a lot more to Zenimax's side to the story than what has been revealed in news articles to date. I'm really interested to see how Occulus responds to item #6 which was only paraphrased above. The complete text reads, "At that time, the Rift was a crude prototype that lacked a head mount, virtual reality-specific software, integrated motion sensors, and other critical features and capabilities needed to create a viable product. Carmack was given a copy of the prototype by Luckey, and Carmack and other ZeniMax personnel added numerous improvements to the prototype.Together, those ZeniMax employees literally transformed the Rift by adding physical hardware components and developing specialized software for its operation. In addition, ZeniMax modified the Rift headset to work with id Software’s well-known computer game 'DOOM 3: BFG Edition' which enabled ground-breaking demonstrations of ZeniMax’s virtual realitytechnology. ZeniMax’s efforts represented an enormous technical advance in the developmentof virtual reality entertainment."

SD Marlow
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Actually, Luckey handed over THE prototype, not a copy.

Kevin Fishburne
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Just to save everyone some time here, Facebook has more money than Zenimax, therefore Facebook will win or settle to make Zenimax go away. Justice!

Nickesh Chauhan
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Can someone explain how, if Zenimax is telling the truth, do they intend to retrieve the "know-how" that Carmack has? It's not like they can erase the information in head, surely it's just a case of trying to score a little more money from another company? Or am I only grasping the surface of a deeper thing?

Daniel Lau
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You're not understanding patent law. If a patent claim was conceived by any Zenimax employee, while a Zenimax employee, then Zenimax has a right to claim ownership of it. In an engineering firm, employees would be expected to keep a diary of their day to day activities, documenting any IP they come up with. The pages get signed by witnesses and dated so, in the case of a patent lawsuit, the engineer can show when they conceived the idea.

Now aside from a journal, electronic records like email or source code would also suffice as evidence that an employee came up with an idea while employed by Zenimax. If you read the document, and please do so you know what is really going on, then you will see that Zenimax plans on showing numerous examples of their employees, lead by Carmack but not solely by Carmack, who provided ideas that form the basis of Occulus' intellectual property. The burden will be on Zenimax to prove the ideas were conceived by their employees at a time when they were Zenimax employees. Zenimax wants the chance to prove to a juror that most, if not all of the Occulus' IP, came from them. Of course, Occulus will have an equal chance to show that the IP came from their own employees or from Zenimax employees after they left Zenimax.

Michael Joseph
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"Note that in the United States, you get ownership of the patent based upon when you conceived the idea, not when you file your patent application. "
--

in March of 2013, US switched to "First-to-File" although that may not be relevant since according to the complaint Carmack began corresponding with Luckey in April 2012.

If one company "invents" a tech in 2012 but fails to file before another company does file some time later who is awarded the patent when the legal dispute takes place after the "First-to-File" law has gone into effect?

Nickesh Chauhan
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Ahh, cool, thanks for explaining. I'll have a read of it.

Daniel Lau
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To Michael Joseph above, I just looked this up. The law doesn't affect any application filed prior to March 16 2013. I'm interpreting it to say that if you have an idea sitting on the shelf that you intend to patent but haven't gotten around to it, then you better file before March 16; otherwise, whenever you do file will become your effective invention date.

Lawrence Mak
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Does that mean Softdisk can now sue Zenimax for not compensating them for the "expertise" and "know-how" that Softdisk helped to "nurture" John Carmack to acquire when he was writing games for them?

Gwyneth Llewelyn
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Very interesting. It's nice to see one side of the story, now we need to see the other one. The way ZeniMax's employees wrote this complaint, the story looks like this:

1) John Carmack is a genius and has been working at VR headsets for eons. Fact.
2) ZeniMax buys iD Software, and, with that, gets access at all of Carmack's IP. Carmack's fine with that, it's standard industrial practice. Work on VR continues at iD.
3) Geeks talk together, that's what geeks do, outside 'corporate politics'. One lucky day, Luckey send Carmack the proto-Rift. Both are excited and start working together on it. Luckey subsequently (and this is what ZeniMax needs to prove in court!) launches his crowdfunding. It's incredibly successful. He starts getting help from Carmack to show the Rift working under Doom and other iD Software games, as demos for what the Rift can do. iD signs some sort of non-disclosure agreement with Luckey and his company so that Carmack can continue to provide help and assistance.
4) Here comes the interesting part, and it is interesting because of the way the story has been written (but ZeniMax might have access to the emails proving that). Apparently, ZeniMax was not overly impressed with the Rift, or had no money to invest in it, but was expecting some agreement — talks about exchanging shares between Oculus and ZeniMax are presented as evidence. What appears to me is that Carmack might have explained how crucial Oculus' product was for iD Software, and wanted to get ZeniMax and Oculus to reach an agreement, so that iD Software and Oculus could somehow 'merge' under the ZeniMax umbrella, and get additional funding from the parent company (ZeniMax) to further develop the Rift and integrate it with all of iD Software's products. The way ZeniMax behaved showed that they didn't really want this to happen, or hadn't the funds, and just made a show of trying to reach that agreement, by insultingly offering way less than what Oculus was thought to be worth.
5) At this stage, the conspiracy theory settles in. According to ZeniMax, it seems that Carmack engages Luckey into a plan to get rid of ZeniMax altogether, and replace them by a different funder. The timings seem to confirm this conspiracy theory. First Carmack leaves, continuing to appear at iD Software for the required 3-month-period, then immediately joins Oculus. He brings his team with him. Their first task is to rewrite all the proprietary code, which Carmack allegedly (using ZeniMax's allegations, that is) knows to be IP from iD Software, but, of course, having written it in the first place, he knows he can replace it all easily. IP laws don't govern people's brains!
6) ZeniMax, which seems not to believe much in the Oculus, tends to ignore the issue. But once Carmack and Luckey start doing roadshows with the Rift showing off iD Software games, ZeniMax feels this has gone too far. They genuinely believe that Carmack is now using ZeniMax's IP to boost Rift's potential sales — because, well, that's what they're doing: showing off iD Software games using the Rift! The situation seemed to be unclear, and it seems that ZeniMax at the beginning seems to allow that (after all, Carmack & Luckey are promoting iD Software's brands — bringing them future income when the Rift is on the shelves — so they can hardly complain about a third party who promotes their products for free!), but, at some stage, feel that Oculus is 'stealing the show' and somehow (thanks to Carmack's brain — where over 20 years of coding Doom and VR reside) is misappropriating ZeniMax IP (not necessarily VR code, but also Doom code!) to sell their product, without compensation — and without authorization. They make a half-hearted attempt to get an agreement. When that fails, they send documents to Carmack & Luckey forbidding them to use software developed by ZeniMax (Doom... not necessarily VR code...) to promote the Rift. At least not without giving them some credit!
7) Carmack & Luckey deliberately ignore ZeniMax, and, a few months later, get bought by Facebook. Who has some of the best lawyers of the world. And deep pockets. ZeniMax feels cheated. They didn't get legally involved during the 2012-13 strife against Luckey & Oculus because they knew none had money. Zuckerberg, by contrast, is another story! He's worth suing... specially because it's highly likely that Zuckerberg will immediately settle, before the Rift hits the shelves.

So, let's play astrology and predict the future :)

Note that in countries that are required to protect employee's privacy, companies like ZeniMax would be unable to copy & paste Carmack's emails and use them in court — without Carmack's written consent. In the US, this seems to be possible, because privacy is not protected at the constitutional level. We have thus to assume that ZeniMax can prove all their claims with documental evidence. This will be an easy task for them.

On the other hand, they will have a very hard time proving something insubstantial — that it was thanks to Carmack's code written for iD Software that Oculus was a success. This is open for the jury to discuss, based on evidence presented by both parties. The evidence, by itself, cannot 'prove' any of that. It's an open conjecture — Carmack may or may not have used any of his code which he has previously written, but he can claim — and show logs from his own computer, for example — that all code written for the Oculus happened in his spare time at home, never at the office. ZeniMax has no way to contradict that, although the use of a ZeniMax-owned FTP server to transfer code from iD Software to Oculus somehow shows that at least part of the code, while possibly not written at iD Software, was transmitted to Oculus and used outside the NDA, so at least there is some 'malicious intent'. I would probably imagine that this happened because Carmack & Luckey genuinely believed, at that stage, that ZeniMax would 'bless' their informal geek joint-venture, and make it official. When this didn't happen, there was a big 'oops'. There seems to be no question that there was some 'abuse' of some ZeniMax resources which helped Oculus out. It's up to a jury and a judge to evaluate how important that contribution was to Oculus. But I think that at least ZeniMax might be able to prove breach of contract and some degree of malicious intent (even though with the best intentions), i.e. ZeniMax employees actively doing things against their orders, because they still hoped that ZeniMax would revert their position towards collaborating with Oculus. Geeks working independently of 'corporate politics' is not unheard of, so the judge might be lenient, but still demand a degree of compensation.

So what I would do if I were Zuckerberg is to offer to buy iD Software and all its IP, if ZeniMax drops the charges. Since both ZeniMax and Facebook know that a crippled-down iD Software, which lost their major team, is worth little, he might offer, say, US$200 million for them. Zuckerberg may be able to get Carmack to prove that 'all his VR work in the Rift was made outside iD Software, at Carmack's home' — because the evidence provided by ZeniMax doesn't say *what* was transferred, just that *something* was transferred — they only conjecture that this was 'essential code' but there is no factual evidence for that. But breach of contract and agreement (the prohibition for Oculus to promote the Rift using Doom and other games) is probably easy to prove in court. So, a settlement is due. Facebook could buy iD Software and that would be the end of the story. The only question is for how much. Apparently iD Software was bought by ZeniMax in 2009 for US$100 million (http://news.bigdownload.com/2009/07/08/was-the-id-software-purcha
se-worth-over-100-million/). So Zuckerberg could offer twice that — a 200% return on investment in 5 years is a good deal for ZeniMax. ZeniMax might refuse, of course, but they would be stupid to pursue this further and get too greedy. Zuckerberg, by contrast, doesn't want to be encumbered by stupid lawsuits when the Rift hits the shelves, so he might prefer to 'lose' another US$200m, merge iD and Oculus, and go ahead without thinking more about the problem.

Or he might buy ZeniMax instead; I have no idea how much their other companies are worth. But having a website where the latest news are from 2012 says a lot about ZeniMax... no wonder Carmack and his team wanted to leave that group :)

Daniel Lau
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Let's remember that we don't know the extent to which Zenimax source code was copied into Occulus, but I'm sure we'll find out if this goes to trial. Second, we know from the Oracle vs Google Android lawsuit that APIs (i.e. header files) are protected by copyright. So Carmack would have to replace pretty much every single line of code. Even so, that wouldn't mean that his ideas for using head trackers or even the algorithms (protected IP) that he used to convert motion sensor data into virtual world camera coordinates wouldn't be owned by Zenimax. But that all aside, I'm not aware of corporate emails being protected by privacy laws in any country. Are you sure that emails sent for a business owned email address can't be read by the owners of the business?


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