Zenimax is demanding a trial to determine whether its complaint against Oculus holds up in court, and some of its claims appear to have some merit -- despite Oculus' statements to the contrary.
Earlier today Zenimax Media and its subsidiary id Software filed a lawsuit in federal court against Oculus (which now includes id co-founder John Carmack) plus its founder Palmer Luckey, and the details of the case are complicated. Zenimax alleges that it provided Oculus with intellectual property and expertise from its employees, most notably from Carmack, under the terms of a non-disclosure agreement that forbids anyone from using it without approval from Zenimax. The company further alleges that Oculus violated that agreement multiple times, most notably in March when it announced plans to be acquired by Facebook to the tune of roughly $2 billion in cash and stock. Zenimax wants some of that money, and it's now demanding a trial by jury to determine whether or not its claims hold up in court. In an effort to better elucidate the issue, we've taken the liberty of reading through the legal complaint and highlighting some of Zenimax's notable allegations against Oculus.
According to the complaint, Zenimax claims to have entered into the NDA with Luckey after it devoted significant time and resources to helping him get the Rift into a state where it could be showcased at E3 2012, then helped to do so by booking appointments for then-Zenimax employee John Carmack to show it off at the show. According to Zenimax, Luckey was just a "college-aged video game enthusiast" when he sent a "crude prototype" of the Rift to Carmack, who then proceeded to significantly improve it with help from other Zenimax employees. "Those Zenimax employees literally transformed the Rift by adding physical hardware components and developing specialized software for its operation," reads the Zenimax legal complaint. "At QuakeCon, Oculus, lacking sufficient virtual reality expertise, could not get the modified Rift to function properly without ZeniMax’s technical assistance," reads another portion of the complaint, alongside this photograph of Carmack helping Luckey with the Rift prototype during QuakeCon 2012. 
Zenimax claims that Carmack agreed to cede ownership of all copyrightable works he produced while working for Zenimax when the company acquired id Software in 2009, and thus Zenimax has a claim on the work he did for Oculus while still employed at Zenimax. To back it up, Zenimax went ahead and reprinted a relevant portion of his employment contract in the complaint. 
The complaint also points out that the original Kickstarter video for the Oculus Rift identifies “ultra-low latency head tracking” as “the magic that sets the Rift apart.” Zenimax claims ownership over the head tracking technology referenced in the video, and thus claims that Oculus owes the success of its Kickstarter directly to Zenimax. Furthermore, it claims that Luckey featured clips of the VR edition of Doom 3: BFG Edition in the Oculus Kickstarter video and promised copies of the game to Kickstarter backers without the approval of Zenimax. The legal complaint does highlight efforts by Carmack to prevent Luckey from using Zenimax IP in the Rift Kickstarter campaign. "It is very important that you NOT use anything that could be construed as Zenimax property in the promotion of your product," Carmack allegedly advised Luckey. He also allegedly declined Luckey's request to appear in the Oculus Kickstarter video.
Zenimax alleges that it repeatedly requested meetings with Oculus to discuss "working together more closely" and establishing a potential partnership in the wake of Oculus' successful Kickstarter campaign, but that Oculus repeatedly side-stepped or delayed those meetings while continuing to use John Carmack's name to advertise the Rift and give demos of the VR version of Doom 3: BFG Edition without approval from Zenimax. Zenimax claims it sought an equity stake in Oculus so that it could profit from its contributions to the Rift, and that Oculus responded by offering Zenimax unsatisfactory deals that caused the relationship between the two companies to degrade. At one point during negotiations, Oculus allegedly claimed Zenimax's proposal was “so far out of the ballpark, we’re left wondering if there’s any hope." Zenimax provides multiple examples of how Oculus executives allegedly impeded the progress of investment negotiations in the complaint, and offers email correspondence documenting Oculus employees' continued requests for technical aid from Carmack despite the "issues" that were brewing between executives of both companies. 
When negotiations between the two companies proved unsatisfactory to Zenimax, the company claims to have told Carmack to stop sharing proprietary information or technical assistance to Oculus "until a satisfactory business agreement could be reached" between the two parties.
Carmack joined up with Oculus last August and was legally forbidden from recruiting former Zenimax employees for two years after his departure. Zenimax claims that he may have breached that agreement when five of his former coworkers resigned from Zenimax simultaneously in February to go work for Oculus. According to Zenimax, "at least one of the resigning employees refused to certify to Zenimax upon his resignation that all Zenimax confidential information in his possession had been returned to Zenimax." And the list goes on. We've taken the liberty of publishing the full legal complaint filed by Zenimax below, so you can check it out for yourself. It's worth a read.
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