What started merely as strongly worded letters and back-and-forth accusations between Id Software parent company ZeniMax Media and VR headset maker Oculus has now turned into an actual legal case. ZeniMax today filed a federal lawsuit in the Northern Texas district accusing Oculus of misappropriation of trade secrets, copyright infringement, breach of contract, unfair competition, unjust enrichment, trademark infringement, and false designation.

The 45-page lawsuit says that ZeniMax "designed the specifications and functionality embodied in the Rift SDK, and directed its development," and it lays out in detail the specific "copyrighted computer code, trade secret information, and technical know-how" that Id cofounder John Carmack and other ZeniMax employees allegedly provided to Oculus during the development of the Rift, including:

Confidential programming code, methods, plans, designs, concepts, improvements, modifications, research data and results, and know-how related to virtual reality headsets; interfaces between virtual reality headsets and interactive entertainment content and/or software; sensors and optical components calibration; latency reduction; low-latency head-tracking, including positional and absolute tracking; head and neck modeling; predictive tracking; chromatic aberration reduction; distortion, motion blur, and jitter/judder reduction; pre-warping of displayed images; combining and selecting devices, displays, cables, optics, and related hardware solutions best-suited for improving the user’s virtual reality experience; minimizing or removing the “screen door” effect on the display; minimizing simulator sickness and/or motion sickness for users; and creating a commercially viable virtual reality headset.

ZeniMax's timeline

ZeniMax began actively pursuing VR technology in 2011, the lawsuit says, but the company ran into "a significant limitation" regarding the latency of the display's reaction to movement. Still, ZeniMax planned to demonstrate its existing VR technology usingat E3 2012, before Carmack had even heard of the Rift.

When Carmack first encountered Oculus founder Palmer Luckey's Rift prototype in April 2012, it was a "primitive virtual reality headset" that was "little more than a display panel" according to the lawsuit. That early prototype allegedly "lacked a head mount, virtual reality-specific software, integrated motion sensors, and other critical features and capabilities needed to create a viable product." The suit also alleges that "Luckey never developed a viable display, and lacked the technical expertise to create one."

Carmack and others at ZeniMax "literally transformed" the Rift, according to the lawsuit, with new hardware and software critical to its use. "Among other improvements, Carmack identified, applied, and developed proprietary solutions to address field of view, center of projection, and chromatic aberration issues; added specially-designed sensors and other hardware; and programmed software to reduce latency and to prevent distortions." ZeniMax helped the Rift further by attracting press attention leading up to and during E3 2012 and by demonstrating the Rift at its booth during the show, the lawsuit says.

All of these improvements and the information surrounding them were provided to Oculus under a nondisclosure agreement, ZeniMax states. In addition, the company points out a clause in Carmack's employment contract saying that any research and development or invention that Carmack made during his tenure at ZeniMax, as well as any copyrightable work, "would be the exclusive property of ZeniMax."

Following the show and throughout 2012, ZeniMax continued to help the newly formed Oculus LLC with Rift development, the lawsuit states, including sending along "customized binary code for the tracking sensors," providing "cables and customized sensors" for the unit, and helping Oculus employees with issues such as flashing firmware and mounting motion sensors. The lawsuit also cites specific e-mails from Oculus asking ZeniMax employees for help with everything from "gravity correction" to "neck modeling" and "desktop rotation."

As a further smoking gun showing Carmack's role working on the Rift while at ZeniMax, the lawsuit points to an April 2014 tweet from Carmack: "When you are in a hurry and you know you wrote the exact needed code (well!) at a previous job, reimplementation grates." As ZeniMax puts it in the lawsuit, "Carmack was referring to the job that he had held for the previous 20 years at id Software, including his work on the 'exact needed code' he was now hurriedly rewriting at Oculus."

Meanwhile, ZeniMax says that it began talking to Oculus about a formalized working relationship and equity share as the development of the Rift went forward, following its Kickstarter success. After failing to respond to these requests for months, Oculus allegedly offered ZeniMax a 3 percent stake in the company for $1.2 million (that stake would be worth roughly $60 million after Facebook's purchase of Oculus in March). In October 2012, ZeniMax offered a counter-proposal that it says included "a larger share of equity in Oculus to reflect ZeniMax's past and continuing contributions."

Oculus allegedly responded that this counter-proposal was "so far out of the ballpark, we’re left wondering if there’s any hope" and then offered to sell ZeniMax unspecified equity for "several million dollars." The result, according to the lawsuit: "No resolution of that issue was reached, and indeed Oculus never provided ZeniMax with any compensation whatsoever."

During these discussions, ZeniMax says, Oculus continued using Id games like Doom 3: BFG Edition and Rage to demonstrate and promote the Rift, without ZeniMax's permission. This was despite an alleged warning from Carmack that "it is very important that [Oculus] NOT use anything that could be construed as ZeniMax property in the promotion of your product. Showing my R&D testbed with the Rage media would be bad, for instance."

As talks broke down, ZeniMax says it instructed Carmack to stop helping with the Rift project. A few months later, Carmack failed to renew his employment with ZeniMax, then officially joined Oculus as CTO in August of 2013 . In February 2014, ZeniMax alleges, five more ZeniMax employees left for Oculus, despite an employment clause that Carmack would not recruit any ZeniMax employees should he leave the company.

In March, of course, Oculus was acquired by Facebook for $2 billion, "thereby confirming the enormous value of the intellectual property that ZeniMax had created, and that the Defendants had taken," as the lawsuit puts it.

ZeniMax is seeking unspecified "actual damages, restitution, disgorgement, unjust enrichment, equitable relief, punitive and exemplary damage, statutory damages, enhanced damages" and "all other relief to which ZeniMax is entitled" from the lawsuit. In a statement, an Oculus spokesperson said "the lawsuit filed by ZeniMax has no merit whatsoever. As we have previously said, ZeniMax did not contribute to any Oculus technology. Oculus will defend these claims vigorously.”