Zenimax vs. Facebook Part 3: History and Context

By Shamus Posted Tuesday May 16, 2017

Filed under: Column 66 comments

Palmer Luckey sent the Oculus Rift prototype to John Carmack in April 2012, and Carmack made improvements to it as I detailed last week.

Disclaimer: Like I said at the start of this series, I am not a lawyer. This is a complicated case and I am not an expert on the law, VR, or corporate contracts. I’m working with incomplete records of complex events where there was often more than two sides to every story. I’ve done what I could to be accurate, but series is intended as opinion commentary, not authoritative historical record.

In May, Zenimax had Luckey sign an NDA. This was probably the fatal mistake in the entire process. While I object to the entire premise of the Zenimax arguments regarding code, most of this case seems to turn on the NDA, and Oculus was probably doomed the moment Luckey put his signature on the thing.

Non Disclosure Disagreement

While I haven't seen the full text, I doubt the Zenimax NDA was this short.
While I haven't seen the full text, I doubt the Zenimax NDA was this short.

When speaking of the NDA, Zenimax stated:

[…] Mr. Luckey acknowledged in writing Zenimax’s legal ownership of this intellectual property. It was further agreed that Mr. Luckey would not disclose this technology to third persons without approval.

An NDA is typically used in a situation where A wants to share information with B, but they need to make sure B doesn’t tell anyone else. In this case Zenimax wanted to assert their ownership of all the stuff Carmack was inventing. I haven’t read the NDA in full, but some relevant parts are quoted in the complaint against Oculus. The NDA applied to all information related to the technology, written or otherwise, whether it was marked confidential or not. Which means that basically every single time Carmack and Luckey talked about VR, Luckey was bound to keep the contents of the conversation private. He was allowed to tell people within his own company, but only on a need-to-know basis and only in pursuit of developing this product.

I can’t get the full text of the NDA (and I’d probably struggle to fully understand it anyway) but I’m betting the poison pill was this one:

(iv) Not use any Proprietary Information to compete or obtain any competitive or other advantage with respect to the Disclosing Party.

Basically, “We own all the stuff that Carmack says. You’re allowed to know it, but if you ever use it to compete with us you’ll be in violation of this agreement.”

I don’t know if this is a particularly strongly worded contract by the standards of this sort of thing. (The NDAs I’ve dealt with were with smaller companies and covered short-term projects rather than ongoing R&D.) But it really does seem like it firmly traps Luckey. It shackles his company to Zenimax by saying that everything that Carmack says or does to improve the Rift is owned by Zenimax and Luckey is never allowed to use it to compete with Zenimax.

If another company came along and wanted to license the Rift, Luckey wouldn’t be able to do that without somehow removing all of the improvements that Carmack had made – even if they were offhand suggestions made over a beer!

It’s clear from this and their later actions that Zenimax was working very hard to gain control over Oculus from the beginning. That makes sense. Engineers love to collaborate, but companies do not. Particularly when one of them is a multi-billion dollar global and the other is a garage operation in Long Beach.

I say Luckey was trapped because if Microsoft had come along and offered Oculus a pile of money to put the Rift on the Xbox, I don’t see how he could have done it. How could he not use Carmack’s advances? Even if Luckey were to split from John Carmack and hire Engineer Bob, and even if Engineer Bob were to come up with the exact same ideas, Zenimax would still be able to drag him into court and say he was using Carmack’s ideas to compete with them.

To avoid a lawsuit, Luckey would need explicit permission from Zenimax, and they could simply withhold that permission unless Luckey gave them what they really wanted, which was equity in Oculus. Note that there wasn’t a reciprocal NDA. Luckey didn’t try to lock down his contributions to the device and restrict what Zenimax could do with it. Carmack and Luckey were collaborating on this device, both were indispensable to its creation, and neither one was interested in playing tag with the Zenimax legal team.

My decidedly non-expert opinion is that Palmer was unwise to sign this NDA in the first place. Maybe he saw it like a trivial formality required to work with Carmack and didn’t really think about how it might come back to bite him laterHe was only 20, after all!. It’s possible he viewed it was a simple promise to keep company secrets and wasn’t thinking about the eventual business ramifications down the road. Then again, I probably would have signed it too. I get to work with John Carmack and invent the future? Hand me a pen.

Seriously, if a lawyer casually hands you an NDA and a pen, take it seriously. I know he’s a nice guy, and everyone is keen to get on with the meeting, and we’re all friends here, but… no. You’re not actually friends. Not all lawyers are dangerous, but you can’t tell by handshake which ones are earnest and which ones are predators. (Or more accurately, which ones are employed by predators.) You’re giving someone a lot of power – and giving up some freedom – when you sign an agreement like this.

Even if the agreement doesn’t seem hard to follow, you’re still taking on some non-zero risk. Even if you comply fully, if you’re dealing with a stronger party (like, maybe you’re just one person and they’re a multibillion dollar corporation) remember that they will now have a lever to use against you. If you piss them off later they can drag you into court over some nitpicky detail and force you to waste your time and money defending yourself.

I’m not saying you should never sign an agreement. (Nobody would ever get anything done if that was the case.) I’m just saying that you should take a contract seriously, even if everyone is smiling and insisting it’s all “just a formality”. Stuff like this can come back to haunt you years later. Read it, think about it, and ask questions.

John Carmack takes some of his pet nerds for a walk.
John Carmack takes some of his pet nerds for a walk.

In June, Carmack demonstrated the Rift at E3. He had a special build of Doom 3 that was designed to support the Rift, and people were able to try the headset on. This was probably the first public demo of modern VR as we know it. The VR of generations past had failed, but this one seemed to be gaining traction instead of vanishing in a puff of disappointment and VR sickness. The buzz began to build, and people began wondering if VR might happen for real this time around.

I’m going to be quoting from a court document dated August 2015. This was after Zenimax had filed their lawsuit, which made six different complaints against OculusActually Facebook, but if you’ve read this far then you’ve probably got a grip on that already.. Oculus filed for a dismissal of the whole thing over various nitpicky details, as you do in these things. The judge rejected this dismissal (which is why the case went to trial) and I’m going to be quoting from the court order where the judge denied the dismissal. It’s got a lot of the relevant info in one relatively small document, which is ideal for my purposes. You can read the full text here, if that’s how you want to spend your time.

Luckey’s objective was to develop and promote the Rift as a commercially-viable VR headset. To that end, ZeniMax sent Luckey proprietary information on an ongoing basis. Throughout June 2012, Luckey continually emailed ZeniMax seeking and receiving access to ZeniMax’s “proprietary information, trade secrets, and know-how.” For example, ZeniMax sent Luckey software that permitted him to install customized firmware “onto the sensors that ZeniMax selected for the Rift.” Additionally, Luckey received “binary code for the tracking sensors that Carmack had added to the Rift.” Moreover, ZeniMax sent Luckey hardware to use in the Rift, including “cables,” “customized sensors,” as well as improvements to the Rift’s “optics calibration and sensor mounting.”

I love how this wording makes it sound like ZeniMax Media Inc., the corporation with $2.5 billion in assets, was personally emailing Palmer Luckey and sending him spare cables. I mean, from a legal sense this is true. John Carmack did all of these things and he did them in his capacity as an employee of Zenimax. But both sides have made it pretty clear Carmack was doing pretty much as he pleased. It’s not like the officers of the company got together for a board meeting to work out if they should send Luckey the new motion sensors this week, or wait until they had enough items to qualify for Amazon free shipping.

This is how legal documents are worded, of course. It just sounds funny when you’re not used to it.

It’s also really obvious how they’ve worded this so it sounds like Carmack is the only one doing any work. They only mention information and equipment flowing from Carmack to Luckey, and nothing going the other way – as if the inventor of the original device had nothing to contribute. I suppose it makes sense they would present it this way. They’re basing their arguments on the premise that Carmack invented all of the crucial stuff.

The original Oculus Devkit, which lacked the motion-tracking sensors.
The original Oculus Devkit, which lacked the motion-tracking sensors.

However, this constant communication does kind of undercut the Zenimax claim a little. There was evidently a lot of communication back and forth between these two, which wouldn’t be warranted if Carmack ran off and invented everything all by himself once he obtained the prototype. This looks more like two people working together to solve a problem.

Right after E3, Luckey began working on a Kickstarter campaign for the Rift. He asked Carmack to help him make the pitch video. (Although apparently Carmack didn’t actually make any additional footage for the video. All of his appearances in the pitch are recycled from his E3 demo.)

According to court documents, at this point ZeniMax proposed that the parties enter a formal agreement. It doesn’t say who they mean by “parties”, and it doesn’t say what sort of agreement. I’m extrapolating here, but I’m willing to bet this agreement wasn’t a proposal that they should all split a pizza. It was probably an effort on the part of Zenimax to get a stake in the nascent Oculus. It was clear at this point that despite the failure of VR in the past, this time it might really be happening and Zenimax probably thought it was perfectly reasonable that they – as the employer of one of the two key engineers on the project – should be running the show.

But aside from paying Carmack a salary, what did Zenimax have to offer them? Speaking as an engineer myself, the last thing I’d want is to place my potentially blockbuster invention in the hands of a corporation two billion dollars above my weight class. If you do that, the whole thing could wind up entangled in patents and exclusive agreements. If you’re an engineer you probably want to make a product the world will love, not one to make your employer rich. You’re not going to take a buyout offer unless you absolutely need the money to proceed.

Zenimax had no technology or expertise to offer these two. The only thing they had was Carmack’s employment contract. They didn’t really own him or his ideas. They could fire him, but he’s been independently wealthy since the early 90s and his reputation means he can find a job almost anywhere. They had no leverage over him whatsoever.

If you’ll allow me to to project my own personality and tendencies onto the two engineers: They were probably simply pursuing their immediate goals: “Let’s invent the cool thing we’ve always dreamed of.” From their point of view, they signed the stupid NDA to placate the legal department and from here on they just wanted to be left alone to build the future.

Back to the judge’s order:

As part of its fundraising campaign, Luckey requested that Carmack promote the Rift in a keynote speech he was scheduled to give at QuakeCon and to put together a promotional “cameo or blurb” on a video he planned use as part of his Kickstarter pitch. In response, ZeniMax proposed that the parties entered a formal agreement. Luckey “ignored” this suggestion, but continued to ask ZeniMax for proprietary information â€" which for unknown reasons ZeniMax continued to provide.

“Which for unknown reasons ZeniMax continued to provide,” is a really funny phrase. We kept doing it and we don’t know why! It makes it sound like the company has some sort of multiple-personality disorder. (Which, to be fair, is true of every company with more than one employee.) In any case, it’s not “unknown reasons”. It’s for the reason of, “John Carmack was working with another engineer to invent something groundbreaking and neither of them felt inclined to get the Zenimax legal department involved every time the device needed a stupid HDMI jack or USB extension cord.”

Also, the phrasing here suggests that Zenimax was trying to be reasonable and enter into a formal agreement and Luckey was ignoring them for no good reason. But in their public statements it’s clear that they were asking for an ownership stake. What possible reason would Luckey have for handing over his company? All they were offering him was help that Carmack was already giving him for free. Well, they might have also be offering money. I mean, I hope they were. Still, it’s entirely possible that Luckey was “ignoring” an insulting lowball offer. Zenimax said in a public statement:

“It was only through the concerted efforts of Mr. Carmack, using technology developed over many years at, and owned by, ZeniMax, that [Oculus founder] Mr. Luckey was able to transform his garage-based pipe dream into a working reality.”

I’m hoping this is just the typical public posturing you get in cases like this and not an honest expression of how Zenimax viewed the Rift. If this is really how they saw the situation, then there was little wonder the two sides were never able to reach an agreement. Zenimax apparently thought all the important breakthroughs came from their guy and Luckey’s contributions had little value. If this is the case, then a lot of the problems here are due to the fact that Zenimax showed up with not enough zeroes on their buyout offer.

Or maybe Luckey just wasn’t selling. It’s impossible to know from these court documents.

While the NDA was the fatal move that gave Zenimax leverage over Oculus, this point in the process is probably the fatal moment when conflict became inevitable. Zenimax was employing a world-famous engineer who was apparently helping to invent a device that could change the industryOr perhaps even launch a new industry! In 2012 it was impossible to predict how big this was going to be! and they somehow weren’t getting a cut. Under normal circumstances an employer might just threaten to fire you, but you don’t want to fire John Carmack without a really good reason.

In hindsight, Carmack probably should have left Zenimax at this point. But that would mean leaving the company he foundedId Software, now a subsidiary of Zenimax. 20 years earlier. And Zenimax would probably rather have him sitting in their office doing nothing at all rather than letting him work for a rival. So while it was in their short-term advantage for Carmack to stick around, it was only adding to this ongoing tension between these three parties over who should ultimately own the Rift. The longer he hung around, the easier it would be for Zenimax to come up with ways to lay claim to it.

Nobody could make a deal, so the engineers just “ignored” the offers from Zenimax and went back to the workshop.

The Oculus Kickstarter campaign. I didn't join. I wisely held back and got the far superior Devkit 2 a couple of years later.
The Oculus Kickstarter campaign. I didn't join. I wisely held back and got the far superior Devkit 2 a couple of years later.

The Oculus Kickstarter launched on August 1, 2012. That was one day before QuakeCon, which ran from August 2 to August 5. Luckey’s funding goal was $250,000, but by the end of the campaign it managed to raise almost ten times that.

More from the judge’s order:

In late August and early September 2012, ZeniMax made “multiple requests” to Oculus to discuss “compensation for ZeniMax’s role in developing and promoting the Rift.” On September 21, 2012, Oculus forwarded ZeniMax a proposal “designed to kick off a formal discussion” of the parties’ future relationship. No agreement was reached and Zeni-Max finally ceased to provide proprietary information or technological assistance to Oculus.

This is a very interesting gem of information. To me it sounds like Carmack had been freely collaborating with Oculus. It’s pretty hard to claim someone is “stealing” your proprietary secrets if your employees are simply giving them away from free. If I post on Stack Overflow asking “How can I speed up VR rendering to reduce judder?” and Carmack replies with a couple of obscure techniques to cut down on latency, Zenimax can’t sue me later for “stealing” their secrets. They might be able to take some kind of action against Carmack (they could at least fire him) but that doesn’t really help their cause. They wanted in on this VR action, and firing Carmack would simply cut them off from it completely. Heck, if Carmack was trapped in an employment contractHe was under an employment contract at the time, although as far as I know the details aren’t public. then he’d probably love to get fired.

At this point, they apparently were finally able to persuade him to stop collaborating with Luckey. The problem is that Carmack’s employment contract wasn’t up until June 23. Maybe Carmack continued to work on VR in the intervening time, but he was no longer sharing with Oculus.

It's not you, it's me and my rising standards.
It's not you, it's me and my rising standards.

Almost exactly a year later in August of 2013, John Carmack joined Oculus as chief technology officer. But he was also still working at Zenimax. This is roughly like when your significant other tells you that while they think their relationship with you is still the most important thing in their life, they’ve also begun dating other people. Sure enough, a few months later in November of 2013 Carmack left Zenimax to work at Oculus full-time, promising that they could still be good friends if Zenimax wanted.

Returning to the judge’s order:

On March 25, 2014, Facebook announced a planned acquisition of Oculus for $2 billion in cash and stock. At the time of the acquisition, Facebook knew, or had reason to know that Oculus’s representation â€" that it had titled, owned, or was authorized to use the intellectual property necessary to carry on its business â€" was false. On July 21, 2014, Facebook closed its acquisition of Oculus, despite Facebook’s knowledge of Plaintiffs’ claims against Oculus and Luckey. Facebook’s purpose in acquiring Oculus was for the financial benefit of its core business of online social networking and advertising.

Zenimax makes the claim that buying Oculus was to benefit Facebook’s “core” business, which is pretty hilarious. It’s always been something of a joke that Facebook had no clear indication of how owning VR would benefit its web-based business model. Even three years later, it’s still not clear. This doesn’t really undercut the Zenimax case, but it is an amusing claim. It’s like someone saying, “New Coke is crucial to the ongoing success of the Coca-Cola company.”

So that’s the relevant history. Next time I’ll get into my analysis.



[1] He was only 20, after all!

[2] Actually Facebook, but if you’ve read this far then you’ve probably got a grip on that already.

[3] Or perhaps even launch a new industry! In 2012 it was impossible to predict how big this was going to be!

[4] Id Software, now a subsidiary of Zenimax.

[5] He was under an employment contract at the time, although as far as I know the details aren’t public.

From The Archives:

66 thoughts on “Zenimax vs. Facebook Part 3: History and Context

  1. GTB says:

    I like to imagine that Zuckerberg intends to make a 1980s cyberpunk-style matrix interface for the new facebook internet, where you actually walk around and interact with things.

    I doubt they are, because I assume Zuckerberg is too savvy to fall for the same marketing nonsense as that company you worked for before that wanted a VR marketplace where you pick items off the shelf. But I dunno. I can’t imagine what else facebook would want with the rift. Maybe it’s just a portfolio thing. I hope it is.

    1. I was hoping it was for a Minority Report style “I can see the web pages like actual pages floating in the air” sort of thing, where you could physically manipulate your posts and whatnot. I don’t see how VR would enable that better than AR with motion controls but who knows.

      Maybe he was hoping to use it as part of his “teach third world countries about technology” initiative, I don’t remember what its called exactly. Again, I don’t see how, but Zuckerberg moves in mysterious ways

    2. Ryan says:

      I like to imagine that Zuckerberg intends to make a 1980s cyberpunk-style matrix interface for the new facebook internet, where you actually walk around and interact with things.

      So, ActiveWorlds, but dark and with motion-tracking for your head?

      1. GTB says:

        Haha, yeah, and with “Money For Nothing” style graphics.


  2. I remember being on the far periphery of all this nonsense when it was first going on, reading news articles but not making much of it. I’m glad there’s someone like you who can boil it all down to digestible history.

    I do remember thinking it odd that Facebook of all things bought Oculus. My impressions, as a casual observer with only minor interest in hardware, the events went like this:

    Oculus came on the scene, nerds were excited enough for it to hit mainstream conversation. To a distracted sideliner it seemed like VR had a 50/50 chance of being either the next big thing or the next big gimick.

    People were talking about it, real industry people like Penny Arcade and various developers, and saying “yes, this is indeed possibly a big deal.”

    Facebook bought Oculus at peak excitement and everything went relatively silent. I, and I assume many other consumer level observers, thought that things had gone the “giant gimick” direction and that in a few years time we could expect seeing Facebook VR intigration in a way nobody wants or cares about.

    It was a while before the hype picked up again, this time for different hardware, and eventually it became clear it was a gaming technology here to stay. I’m interested in how, if John Carmack was instrumental in getting the base technology working, the likes of Sony managed to launch one of the first proper gaming VR sets

  3. Philadelphus says:

    A comment that has nothing to do with the article itself (although I did read it, I just don’t have anything interesting to say about it), but that header image got me thinking: VR is about having two cameras render a scene from very slightly different angles to simulate binocular vision, right? What if, instead, those two cameras were pointing nearly 180° away from each other to simulate the vision of birds or herbivorous prey animals? How would the human brain react? I might actually try a VR simulation of that just to see what it would be like (though I doubt “Prey Simulator 2017” would be a financially viable product).

    1. Jabor says:

      I suspect you’d get horrible VR sickness at first.

      But I also suspect if you pushed through that and kept it on for a substantial period of time, you’d adapt to it just fine. And then you’d get reverse-VR-sickness after taking it off.

      1. Echo Tango says:

        Humans can definitely adapt to upside-down vision. I too, imagine that other types of vision could also be adapted to, including the aforementioned birds and herbivores.

    2. Ryan says:

      How would the human brain react?

      Headaches. Lots of really bad headaches, at least initially. I imagine eventually you’d get used to it, but I wouldn’t want to try. How can I say this? When I was a wee tyke, the science center in town had something that did exactly that, using mirrors and lenses to give you that effect in your immediate surroundings, and they actively warned people that any more than a minute or two would give most people headaches.

      1. Graham Mitchell says:

        I know if you invert peoples vision with lenses, after a relatively short period (I want to say days) the brain adapts. But changing from binocular vision to an alternative? Nope can’t imagine that would be pretty

        1. Echo Tango says:

          It would be uncomfortable, but I think a person could actually adapt to this. People can walk around with an eyepatch temporarily, or go cross-eyed, and both of those mess with their normally-binocular vision. I think you underestimate the adaptability of the human brain. :)

    3. Graham Mitchell says:

      I suspect that’s a one way ticket to Vomit City, where the grass is green and the *bleeeeeeuuuggghhhhh*

      1. Droid says:

        Damn, you got me!

    4. Tom says:

      There are less drastic tricks you could do for some pretty trippy effects. By simply adjusting the separation of the two cameras, you could get an Alice in Wonderland sensation that the wearer was shrinking or growing. (Yes, you *could* just as well do it by growing or shrinking the level geometry relative to the player. But this way you could have multiple players of varying and changing size within the same level.)

      There are plenty of other weird things to try, though. Raptor/predator eyes (parallel, but with high zoom at the centre, decreasing radially to give both wide FOV and zoom at the same time) Insect eyes? (Incomprehensible in 2D, but possibly one could adapt to correlate them in 3d?) Body-surface eyes?

      1. Philadelphus says:

        Hmm, or what if you tied the two cameras to your two hands and could move them around like independent eyestalks for mollusk vision?

    5. Syal says:

      Do lazy eyes usually turn off? My guess is it would be really uncomfortable until one eye eventually turned off.

      1. Sam says:

        Lazy eyes do turn off, after a point. I have a lazy eye as a result of medical problems, and your brain trains to pay attention to your dominant eye mostly. The irrelevant information is just disregarded, think of your peripheral vision. the ‘bad’ eye can be looking at the window while the ‘good’ one is focused on your monitor, and you can still see both, but your focus effectively eliminates the spare information.

        Alternately think of how things look when you cross your eyes, but try to think of what only your dominant eye can see in that situation.

    6. Sabrdance (MatthewH) says:

      The F-35 helmet display does something like this. The helmet is VR with the plane’s IR sensors (I wonder if looking at everything in black and white simplifies a lot of the problems discussed last week). I know the pilot can “look through the airframe” but I think they can also just bring up other displays -so they can be flying one direction but looking behind them without turning their head.

    7. MichaelG says:

      When I was writing my first VR code, I misread the documentation and implemented the eyes reversed. So I’m sitting in this world looking at left eye stuff with my right eye, and vice versa.

      At a distance, nothing seems wrong, because the two views are similar. But as you get close to an object, things get very weird. My impression is that the object is huge, even though I can see it right in front of me! No nausea, but definitely headaches.

    8. Dreadjaws says:

      I doubt “Prey Simulator 2017″ would be a financially viable product

      You are correct. You’d be right on line for a lawsuit from Zenimax there.

  4. Tizzy says:

    Another PSA: when a lawyer hands you something to sign–NDA or other–always have your own lawyer read it. These papers are meant to be refined through an adversarial process, and the first draft is always ridiculously lopsided.

    1. Sabrdance (MatthewH) says:

      Yes, yes, a thousand times yes. Never enter into a big agreement like this without a written contract. Once I learned that there was an NDA with Luckey’s signature on it, I knew how this story ended.

    2. Alex Broadhead says:

      NDA, or especially a non-compete.

      If you are an engineer, you pretty much cannot afford to sign any sort of non-compete, unless you are explicitly being paid for the years you won’t be able to work after you leave your current employment.

    3. Douglas Sundseth says:

      The first thing you should do if anyone hands you a legal document and asks you to sign accompanied with “This is just a formality” is to write “This is just a formality” on the front page and hand it to them for their initials.

      The second thing you should do (before signing anything) is take it to your lawyer.

      1. Syal says:

        Douglas Sundseth wins. Formality.

        Lawless Victory.

        _________ (initial here)

      2. Matt Downie says:

        I cannot get my head around the idea that a software engineer like me would have a lawyer. Is this an American thing, where lawyers are everywhere?

        Maybe for someone working in the Carmack leagues, this would be important, but the chances seem slim of me ever working on something so high profile that a former employer would bother trying to enforce a non-compete clause or whatever.

        1. Syal says:

          Any place big enough to have a court has lawyers. A software engineer probably won’t have his own, but you should be able to find one who will read over a contract for you.

  5. Da Mage says:

    And in the latest news, hot off the heels of their facebook victory, ZeniMax are now suing Samsung for apparently using those ‘secrets’ that Carmack made in regards to mobile VR.

    Good luck with that, I don’t think that’ll work in that case, unless Carmack was also secretly sending code to Samsung.

    1. Mephane says:

      They are trying really hard to look like patent trolls.

  6. Lee says:

    Typo alert: “If you'll allow to to project” should be “If you'll allow me to project”

    I have to wonder if Carmack really was this clueless about the NDA. It certainly seems like it from the way he was acting, but he’s been in the industry for decades. How could he possibly be that naive of the legal issues?

    1. Tom Bartleby says:

      I have to wonder if Carmack really was this clueless about the NDA. It certainly seems like it from the way he was acting, but he's been in the industry for decades. How could he possibly be that naive of the legal issues?

      My theory is that, back when everyone signed the NDA, they really were thinking that they’d end up working together. Remember, this was before the Kickstarter, so Oculus probably thought they’d ned someone to put up some serious cash before they could start production. And Zenimax seems like the logical somone, since they were already involved and clearly believed in the technology. Also, when Oculus did start the Kickstarter, they were promising free copies of Doom to some of their backers””something that makes a lot more sense if they were planning to partner with Zenimax.

      In my view, where things went off the rails was when the Kickstarter was such a success. Suddenly Oculus realized that they didn’t need Zenimax’s cash, and the idea of giving up a bunch of equity for money they didn’t need was suddenly way less appealing. Clearly they were willing to do so, for an offer with enough zeros, but I bet Zenimax was thinking millions, not billions. And, absent the Kickstarter, I bet that Oculus would have taken their offer, because it would have been the only way to get the product to market.

      1. Paul Spooner says:

        I had forgotten how recent Kickstarter is. And Patreon too. Seems like forever.

        1. evileeyore says:

          Internet time.

          My preteen life before the Internet feels like more than a million years ago.

      2. Tizzy says:

        Sounds reasonable. Like two companies trying to figure out how to develop a mutually advantageous project. Usually in tech, there are a lot of moving boundaries and contract-as-you-go that can happen.

        But if somebody can afford to walk away, it’ll leave a mess, for sure!

  7. Jeysie says:

    This sort of thing just solidifies my belief that patents and copyrights should only be ownable by flesh-and-blood people.

    You should be able to lease usage of your copyright/patent to a company or else stuff would almost never get done logistically, but the lease should be revokable/transferrable.

    I’m increasingly tired of situations where “original creator/inventor wants to do something with the thing they created/invented but cannot because they no longer own rights to it”. I feel 99.9% sure that was not the original intent of copyright or patents.

    (To say nothing of the issues with public domain and whatnot.)

    1. Tizzy says:

      But almost nothing can be traced back to single individuals these days! Each person would own the rights to a tiny piece of something, useless in isolation. I can’t see any innovative thing getting done in this scenario.

      1. galacticplumber says:

        You mean that the entire group of innovators, artists, and so on has effective veto power on copies as opposed to companies, and those same individuals get equity based exactly on what they actually put into the project? That’s more or less how things are now only the effective number of people with real equity actually decreases, thus making a much bigger share for said holders. Also as I understand it the proposed system where only individuals own ideas THEY made means the thing frees up on the death of the person or persons involved instead of infinity years later.

      2. Jeysie says:

        What galacticplumber said, more or less.

        I’m fine with individuals collectively making agreements, socialist-style. What I’m not OK with is “You have zero say over your share of the matter once you stop working for/with a company, since the company now has all your rights.” Stuff like this where it’s Zenimax who has all the say and not any sort of agreement between solely Carmack and Luckey who are the ones who actually did all the work.

    2. Xeorm says:

      Personally I think this was a direct idea behind the idea of copyrights/patents. One entity owns the idea/thing and that’s it. Issue is more how we don’t get people to think of corporations as separate entities. They’re always nebulous things that are there for legal purposes so that the person can accomplish something (I’m thinking heavily of Shamus’s attempts to self-publish his new game) until it comes back later to bite them because they were equating the corporation with themselves.

      Easily one of the best lessons I learned in college was playing some good stocks/corporation board games. Really taught me the differences and how you need to think of them in order to really compete.

      1. Jeysie says:

        I just can’t believe that was the original idea, TBH.

        The purpose of copyrights and patents is to give people an incentive to create via letting people know they will receive some measure of control over their ideas for a time so they can make a return off it.

        But as this article shows, and the many stories of game creators locked out of profiting off their old work shows, that’s no longer the case. Copyrights and patents now stifle and strangle creativity by either punishing people for creating (via lawsuits by patent and copyright trolls/hoarders who themselves are doing nothing with their patents/copyrights), or removing the ability of creators to profit off their work unless they work for their company for life and their company always sells their work.

        To say nothing of also removing the other end of the equation which ensures that society still benefits from the work one day via the public domain.

        This all just doesn’t seem right. There’s gotta be a solution for this.

        1. Richard says:

          The original purpose of patents was to reduce the number of “Trade Secrets”.

          If people have no legal protection for their invention, then they will try to keep it secret.
          If they succeed then it is lost forever on their death!

          Patents were to give inventors a few years of monopoly in exchange for them publishing their invention.
          At the end of the monopoly period anybody could do the thing – the knowledge can’t be lost.

          This is why they exist, and you can see how incredibly broken they now are.

          1. Jeysie says:

            Yeah, because we’ve basically gone back to Trade Open Secrets. As in, sure, the design is technically published now, but it’s still lost forever anyway because nobody will be able to use it including in many cases even the original creators being unable to use it.

            It’s arguably even worse at a result of that, because at least with trade secrets the original creator benefitted if nothing else, but now even they get screwed over. Nobody really benefits from this current arrangement except financiers and lawyers.

            And again, it seems to specifically be letting companies own patents as entities separate from the original creators that is the core of the resulting problems.

      2. doran says:

        Do you have some examples of these stock /corporation board games?

  8. Alan says:

    I feel bad for Carmack, who is clearly a geek who wants to make cool stuff and share it with the world. Selling Id was a huge mistake, and one he should have foreseen, perhaps he was too innocent.

    Everyone is pretty much evil and have repeatedly shown that they’ll make the world a worse place just to make a bit more money (or in Luckey’s case, for the LOLs), so no one else involved gets any of my sympathy.

  9. wswordsmen says:

    Minor correction, but you need to clarify that “New Coke is crucial to the ongoing success of the Coca-Cola company” is absurd to say now. It was totally reasonable and true when New Coke came out. Coca-Cola was lucky they were able to recover.

    1. Syal says:

      And “New Coke was intended to be crucial” is still true. Facebook’s purpose for buying VR was to make money; the plan for doing so being inexplicable and possibly drawn in crayon stick figures doesn’t change the motive.

    2. Echo Tango says:

      I believe the absurdity of the statement was assumed to be known by the reader. i.e. Shamus is drawing a parallel between the silliness of New Coke, and the silliness of Facebook investing in VR tech.

  10. Wide And Nerdy ♤ says:

    I’m always looking for more programming/tech jokes of the sort found in that cartoon. Anybody know of any?

    Here’s one. https://toggl.com/programming-princess

    1. Primogenitor says:

      “that cartoon”? which cartoon?

      1. Wide And Nerdy ♤ says:

        Oops. The one in part 2.

        Lets just post some fun programmer comics here.

  11. Rod says:

    They didn't really own him or his ideas.

    Carmack’s employment contract probably did stipulate that Zenimax would own in perpetuity any ideas he developed while employed there. No one would hire an engineer without such a contract.

    1. Alex Broadhead says:

      Yes, this.

      Here’s the full quote:

      Zenimax had no technology or expertise to offer these two. The only thing they had was Carmack's employment contract. They didn't really own him or his ideas. They could fire him, but he's been independently wealthy since the early 90s and his reputation means he can find a job almost anywhere. They had no leverage over him whatsoever.

      It obviously depends on the nature of your contract (or lack thereof) with your employer, but the default is that your employer explicitly owns _all_ of your ideas, including ones unrelated to their business. If you are an engineer and have your own side projects, you need to get a lawyer to draw up documents that you can have your employer sign to say that they release any claim to those side projects!

      Further, they can certainly do much more than fire him: they could sue him, directly, for breach of contract, etc. Given that he’s independently wealthy, there’s all sorts of risk that comes directly from the leverage they have as owners of the technologies he is creating. Usually it’s not really worth suing your employees, as they just don’t have much that you can take. Carmack being wealthy gives them more leverage, not less. And it’s hard to get a job when you can’t use any ideas you have already had that are owned by your previous employers, even without an explicit non-compete, which we don’t know whether he had.

      1. Decius says:

        The default is that the company owns the ideas that you have /on their time/, when they are paying you to do things for them.

        They want to claim things that you have on your time, and sometimes succeed, but it isn’t nonsensical for an engineer to be working for two different corporations in the same week.

        1. Blackbird71 says:

          Most engineers’ employment contracts would actually prevent them from working for two different corporations at the same time. Those same contracts also do lay claim to engineers’ ideas and creations regardless of whether they were developed “on company time” or not. The rationale for this is twofold: 1) many engineers are paid salary, not hourly wages, and so there is technically no “company time” and “not company time”, and 2) more importantly, the assumption is that any ideas an engineer comes up in their off-time are influenced or enabled by the use of tools, training, or other assets which are owned by the employing company.

          Source: I’m an engineer currently employed at a major technology company (you’d definitely recognize it if I named it) which includes such clauses in all of its employment contracts.

          1. Alex Broadhead says:

            Yep. That’s my experience as well, and I’ve worked at a variety of recognizable tech companies, though some as contractor rather than full time employee.

            Which brings up a different sort of arrangement that companies have with employees – contract work. I know many contract employees, several of whom are independent contractors/consultants who do work for multiple companies simultaneously. I can only assume that they and the companies they work for are very careful about spelling out the scope and ownership of their work in their contracts.

            (To be clearer, when I’ve worked as a contractor/consultant, it has always been for a single company at a time via a placement firm, which is very different than contract piecework.)

          2. sheenyglass says:

            Many contracts have those terms. However, they are not always enforceable. IIRC, California law would void as unenforceable the provision which gives your employer IP rights in your own inventions/creations made on your own time.

            Since so much tech is in California (including Luckey at this time I believe) but Bethesda is based in Maryland, I also wonder if Luckey was engaging in CA nonchalance without realizing the extent to which Bethesda was capable of asserting ownership of Carmack’s work.

            1. Blackbird71 says:

              Again, I’m an engineer, not a lawyer, so I don’t know the legal specifics, but I am employed in California, for a company with a significant presence (and headquarters) in California, and they don’t seem to have any trouble enforcing this clause.

              1. sheenyglass says:

                Well I’m not admitted in CA, so grain of salt, but I think an important distinction is whether the idea actually is “influenced or enabled by the use of tools, training, or other assets which are owned by the employing company” (“Training” may be an exception however, as if trade secret principles are analogous, there is a distinction between skills uniquely relevant to the employer and general professional development, with only the former being protectable).

                This, California Labor Code Section 2870, is the statute that I’m referring to (https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=LAB&division=3.&title=&part=&chapter=2.&article=3.5. ):

                (a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either:

                (1) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or

                (2) Result from any work performed by the employee for the employer.

                (b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.

                So if it “relates” to the business or “results” from employment, the employer has a claim. However, I do not think this would be assumed without some connection to the employer’s business. So an idea unconnected to the work performed for the employer seems like it should remain the employee’s.

                One caveat is that this statute uses the term “invention”, which may mean that it applies to patentable inventions rather than copyright. In that case, significant amounts of what a software engineer does would be excluded. Again, I am not a CA lawyer so interpretation of this provision by CA courts is outside my experience.

                Also, I would not be surprised if employers went beyond what could be enforced in court, as the litigation would be painful even if the employee won.

  12. AndrewCC says:

    Let me give you my opinion as a non-engineer.
    Zenimax is the spawn of Bethesda Softworks, which made Morrowing, Oblivion, Skyrim, Fallout 3 and Fallout 4, all of which I greatly enjoy.
    Oculus is a piece of tech that provides, as Shamus put it, an experience. I’m not at all interested in that experience but I’m curious to see what dystopian Matrix-like reality it will lead to. It is now owned by the titan Facebook, another tech, and experience that I am, at best, ambivalent about.
    I don’t particularly care for John Carmack, other than recognizing his HUGE contributions to early 3d game engines.
    I’m don’t have any strong feelings one way or the other but I’m leaning, slightly, towards “Fuck Oculus, fuck Facebook, they can afford to pay Zenimax half a billion dollars. “

    1. Primogenitor says:

      Its more “Bethesda made morrowind etc, then Zenimax gobbled them up like a dragon clone of EA”

    2. Decius says:

      Zenimax made Morrowind into a crappy MMO. As far as I’m concerned that destroyed all of their accumulated goodwill.

      I hope FaceBook loses a billion bucks and the lawyers get all of it.

      It takes some serious misbehavior to make me want the lawyers to win.

  13. baud001 says:

    the company has some sort of multiple-personality disorder. (Which, to be fair, is true of every company with more than one employee.)

    Even with one employee you can have multiple personalities…

  14. WWWebb says:

    So is the crux of the case here that by selling Oculus to Facebook, he “disclosed” proprietary information to Facebook in violation of the NDA? Zenimax doesn’t make VR software or hardware so it seems really odd to argue that their business is being harmed. Did Oculus file patents using the tech? Did they disclose it as part of an industry standard?

    Unless Oculus built something into their devices that keeps them from working on Doom and Fallout 4, I’m not seeing the harm or advantage.

    EDIT: I just saw that Zenimax is now suing Samsung for using Oculus tech in their Gear VR. THAT would probably qualify as a violation of an NDA, even if the Facebook one is a stretch.

    1. Falcon02 says:

      Here’s my take on this (though I’m NOT a lawyer)…

      Yes, NDA wise, providing the information to Facebook would count as an unauthorized disclosure.

      The other aspect is the “non-compete” clause Shamus highlighted, where simply continuing to develop VR “in competition” with Zenimax could be a violation. This seems it might be slightly dubious as Zenimax does not actually directly compete in VR. However, I suppose they could try to argue they intended to have such a competing product (by getting ownership of Oculus) and it was directly undermined by Luckey.

      I will also say, I was expecting Carmack’s non-compete and intellectual ownership employment contracts to be a bigger deal in this. As those contracts tend to be pretty strict in wording to allow the company to attempt to claim ownership of any ideas/inventions developed by their employees during their employment. And this case seemed to be as Carmack’s open-ended work for Zenimax.

  15. Alex says:

    I think I just figured out what a big point of confusion was for me. Zenimax clearly sounds like they think Carmack was working on Oculus with company resources “on company time”. Shamus and many others clearly seem to be viewing Carmack’s involvement as something more like a side project he was fiddling around with.

    Does Zenimax claim any material use of resources? Was Carmack developing Oculus technology in his office on their workstation? Sending Luckey miscellaneous parts that they technically owned? Or was Carmack working out of his own “garage”?

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