The Oculus-ZeniMax saga is as convoluted as any soap opera; here’s the story behind the lawsuit

ZeniMax Media has been awarded $500 million in damages in a lawsuit that alleges that Oculus VR essentially stole the Rift from ZeniMax. While the jury did rule that Oculus did no such thing, Oculus was ordered to pony up the cash because it violated a non-disclosure agreement with ZeniMax.

The Oculus story

The Oculus Rift was the brainchild of Palmer Luckey. He originally built a prototype head-mounted device that could display 3D content. This prototype did not have sensors or any tracking capabilities.

Luckey showed the device to John Carmack who was working at id Software at the time. If you don’t know Carmack, he’s the creator of Wolfenstein 3D and Doom; he’s a legend in game development circles.

Carmack was very excited by the device and started working with Luckey to iron out the kinks in the device and apparently, gave him advice on how to develop the software and tools required to transform the display into something like the Oculus Rift we know.

The problem is that id Software is owned by ZeniMax Media (as is Bethesda Softworks and Arcane Studios). Initially, ZeniMax didn’t interfere much with Carmack’s work and Carmack, while he did help Luckey out, tried to dissuade him from using ZeniMax properties to market the Rift.

Luckey however used a demo of Doom 3: BFG Edition in his original KickStarter pitch for the Rift.

At around this time, Luckey started his own company, Oculus, and continued development under this banner. The idea of the Rift had started gaining popularity as well. ZeniMax claims that Luckey had asked for information on the hardware and software used, the firmware involved, etc., which was provided to him by ZeniMax.

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That last bit is technically correct, but that information was actually provided by Carmack, who was an employee of id Software and, by extension, an employee of ZeniMax Media. All properties handled by Carmack are legally ZeniMax property.

Carmack also insists that ZeniMax had no interest in Luckey or his work and that any information he gave Luckey since the founding of Oculus VR was unrelated to any ZeniMax property.

Carmack and a number of ZeniMax employees quit ZeniMax to join Oculus. ZeniMax demanded a 15 percent stake in Oculus in exchange for the technology and software used, Oculus declined. ZeniMax allegedly called the Oculus team “kids” and threatened to stop Carmack from working with them.

Carmack was then ordered to stop working on the project. This was the point at which Carmack quit.

ZeniMax has since accused Oculus of becoming “evasive” and “uncooperative” about the negotiations.

Since joining Oculus VR as the Chief Technical Officer, Carmack and the team insist that the project was built entirely on code and hardware that was unrelated to anything from ZeniMax.

ZeniMax claims that Carmack stole “thousands of files” and proprietary tech from the company at the time he left.

Carmack has pointed out that all of Oculus’ code is available online for free. ZeniMax is yet to identify any of that code as proprietary.

Interestingly, ZeniMax’ original lawsuit against Oculus VR was filed in 2014, a few weeks after its acquisition by Facebook. Oculus is alleging that ZeniMax is only suing it because of the tie-up with Facebook, citing “embarrassment, jealousy, anger and no facts” as ZeniMax’ motivation.

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ZeniMax’ accusations even took a personal turn when they alleged that Luckey was not capable of building the device himself. In fact, they stopped just short of calling Luckey a fool.

Carmack and the Oculus team came out in full support of Luckey and his capabilities.

The Verdict

ZeniMax Media’s lawyer called the incident a heist, reports Polygon. The company demanded $2 billion in compensation and $4 billion in punitive damages.

The jury, however, agreed that Oculus did not steal any trade secrets from ZeniMax Media. The award of $500 million relates to the breaking of an NDA that Palmer Luckey signed with ZeniMax media. The verdict reads that ZeniMax is getting $200 million for the NDA, $50 million for copyright infringement, $50 million each from Oculus and Luckey for false designation and another $150 million from Oculus co-founder Brendan Iribe for the same reason.

Oculus will be appealing the verdict, but are happy that the jury ruled in their favour regarding the trade secrets.

ZeniMax didn’t say much, only insisting that what Oculus did was theft. They later stated that they will “take steps” to ensure that there will be “no ongoing use of our misappropriated technology.”