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Oculus CTO John Carmack is suing Zenimax for $22.5M

Oculus CTO John Carmack is suing Zenimax for $22.5M

March 9, 2017 | By Alissa McAloon

March 9, 2017 | By Alissa McAloon
More: Serious, Business/Marketing

John Carmack, co-founder of id Software and current Oculus CTO, has filed a federal lawsuit against Zenimax, seeking upwards of $22.5 million in damages, but could walk away with up to $45 million if the case goes in his favor. 

According to Dallas News, the amount sought in damages equals what Carmack claims is still owed to him by Zenimax from the company’s 2009 purchase of id Software. That $22.5 million currently sits in a promissory note, issued by Zenimax shortly after the sale.

Carmack says he recently tried to convert that note into Zenimax stock, effectively doubling his shares in the company, and then sell the sum for the $45 per share put option agreed upon at the time of the original id Software sale. That guaranteed per share price is set to expire later this year. 

All together, that would have required Zenimax to pay Carmack roughly $45.1 million for the stocks, but the lawsuit says Zenimax “made it clear that the company would not voluntarily comply on a timely basis wit the conversion notice” and is as such in violation of the asset purchase agreement between the two companies. 

In addition to the $22.5 million sought in damages, the lawsuit also wants Zenimax to let Carmack sell his stocks in the company under the terms originally agreed upon.

The lawsuit further alleges that Zenimax’s actions are a result of the recent, and in some ways yet ongoing, legal battle between itself and Oculus. Zenimax was ultimately awarded $500 million in that previous ruling, to be paid on the charges of NDA violations, copyright, infringement, and false designation, though Oculus has stated its plans to appeal. 

UPDATE: Zenimax has issued a statement in response to the suit filed by Carmack, which, in short, summarizes the courtroom history between Zenimax and Carmack and claims that his complaint is "completely without merit". The statement in full can be read below:

"We have reviewed John Carmack’s latest legal complaint which is completely without merit."

"We note that this is Mr. Carmack’s second complaint against ZeniMax. In the recently completed trial of ZeniMax Media Inc. et al v Oculus VR et al, in which Mr. Carmack was a named Defendant, and in which ZeniMax was awarded $500 million in damages for misappropriation of its intellectual property, Carmack had counterclaimed, seeking damages for ZeniMax’s alleged violations of his employment agreement. The jury flatly rejected Mr. Carmack’s complaint, and found for ZeniMax."

"Mr. Carmack was personally found guilty by the jury of the theft of ZeniMax’s property, including thousands of confidential ZeniMax documents he secretly took when he quit his employment, and his theft of the entire source code to id’s latest game, RAGE, including the id tech 5 engine. In addition to those crimes, it was revealed by an independent court-appointed computer forensics expert, that upon receiving notice of the Oculus lawsuit, the files on Mr. Carmack’s Oculus computer were intentionally wiped--destroying the evidence, and that a sworn affidavit Carmack filed with the Court denying the wiping was false. The wiping occurred right after Mr. Carmack researched on Google how to wipe a hard drive. And there was much more."

"Apparently lacking in remorse, and disregarding the evidence of his many faithless acts and violations of law, Mr. Carmack has decided to try again. We look forward to presenting our response to Mr. Carmack’s latest allegations in Court."

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