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Oculus Allegedly Broke Intellectual Property Agreement with ZeniMax

Was John Carmack's know-how allowed to leave the building?

Game publisher ZeniMax said Thursday morning that Facebook-owned Oculus VR violated an intellectual property agreement regarding its forthcoming virtual reality headset, the Oculus Rift. Oculus denies the claim, but here’s what we know so far.

Until November of last year, Oculus CTO John Carmack was still an employee of ZeniMax subsidiary Id Software, which he co-founded in 1991. Id is perhaps best known for its groundbreaking first-person shooter games: Wolfenstein 3D, Doom and Quake.

The widely respected programmer’s interest in virtual reality, and his mentorship of Oculus co-founder Palmer Luckey, lent the startup a great deal of legitimacy early on.

Carmack told USA Today in February that part of the reason he left Id was that ZeniMax was not interested in letting him put future games like Doom 4 on the Rift. Today, he tweeted that the only thing his former bosses own is code.

In May 2012, a month before the Rift debuted at E3 2012, Id and Oculus signed a nondisclosure agreement governing how Carmack’s work on virtual reality as an Id employee could be shared between the companies.

A copy of the NDA obtained by Re/code says, in part, 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.”

The NDA notes that both parties were under “no commitment” to invest in one another or “enter into any other business arrangements of any nature whatsoever.” ZeniMax said in a statement that it discussed taking equity in Oculus but that talks between the two companies fell through.

Id legal EVP J. Griffin Lesher signed the NDA, as did Luckey. Carmack is not named, nor did he sign the document, but the contention is that all his work — not just code he wrote — as a ZeniMax employee was owned by the company, which expected compensation if that work ever made it into a money-making product. A source familiar with the dispute said Carmack had negotiated an exception to his ZeniMax contract for his aerospace startup, Armadillo Aerospace, but that no such exception was negotiated for virtual reality.

Oculus has been selling prototypes of the Rift since last year, albeit only to developers and not to consumers, from which it has made about $25.5 million; it was only after Facebook’s $2 billion purchase of the company, which received FTC approval last week, that ZeniMax decided to step forward.

Update: A previous version of this story embedded a PDF of the obtained NDA. That embed has since been removed, at the request of the source who provided it.

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