Oculus VR, ZeniMax dispute heads to court ahead of Facebook acquisition

Game publisher ZeniMax is demanding compensation for intellectual property allegedly used by Oculus

By , IDG News Service |  IT Management

The dispute between Oculus VR, a wearable virtual reality technology company that Facebook is acquiring, and ZeniMax Media reached court Wednesday.

ZeniMax is suing Oculus for exploiting commercially intellectual property the games publisher allegedly shared under a non-disclosure agreement with Oculus, which enabled it to improve on its "crude prototype" of a virtual reality headset.

Facebook said in March it had reached a deal to buy the developer of the Oculus Rift headset for about US$2 billion.

The non-disclosure agreement expressly provides that ZeniMax's intellectual property cannot be disclosed to or used by any third parties without its prior written approval, according to the complaint.

"Defendants now stand to realize billions of dollars in value from ZeniMax's intellectual property," ZeniMax said in its complaint in the U.S. District Court for the Northern District of Texas, Dallas division on Wednesday.

Oculus never obtained a license for the use of ZeniMax's property, which included copyrighted computer code, trade secret information, and technical know-how, nor any right to sell or transfer it to third parties, the complaint said.

The dispute between the two companies hinges around alleged collaboration from April 2012 between Oculus founder Palmer Luckey, then a video game enthusiast working on a headset, and John Carmack who was technical director for ZeniMax's Texas-based subsidiary, id Software, until he joined Oculus in August 2013.

Carmack, a well-regarded games programmer, had agreed on joining ZeniMax that it would be the author and owner of any copyrightable works that he prepared within the scope of his employment, the complaint said.

The Rift headset was at that time 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, according to the complaint.

Carmack and others at ZeniMax worked with Oculus to transform the Rift by adding physical hardware components and developing specialized software for its operation and modified it to run with id Software's computer game "DOOM 3: BFG Edition" which enabled demonstrations of ZeniMax's virtual reality technology, the filing said.

"Without it, there would not have been a viable Rift product," according to the complaint.

After what ZeniMax describes as a successful demonstration and "positive press" of its virtual reality technology at the Electronic Entertainment Expo ("E3") industry convention in Los Angeles in June 2012, Luckey realized the opportunity presented by virtual reality technology and formed Oculus to commercialize the Rift a few days later.

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