Facebook Inc (FB) Faces Rift Over Oculus Headset “Rift”

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On March 25th, Mark Zuckerberg announced that Facebook Inc (NASDAQ:FB) was set to acquire the virtual reality company for $2 billion in the hopes that the company could change the way that people interact online.

Facebook Inc (FB) Faces Rift Over Oculus Headset "Rift"
Now, it’s coming to light that ZeniMax Media Inc, a videogame maker, believes that it owns the rights to intellectual property to Oculus’s virtual-reality headset “Rift” and is prepared to fight for it. In the last couple of weeks, lawyers for ZeniMax have sent two letters to both Oculus and Facebook Inc (NASDAQ:FB) asserting that a former ZeniMax employee, John Carmack, came to Oculus last August for his new job with ZeniMax’s intellectual property. ZeniMax is claiming, according to documents reviewed by the Wall Street Journal, that its property is what launched Oculus from garage-based startup to a major tech player in just two years’ time.

Absurd claims?

A spokesman for Oculus said: “It’s unfortunate, but when there’s this type of transaction, people come out of the woodwork with ridiculous and absurd claims. We intend to vigorously defend Oculus and its investors to the fullest extent.” Mr. Carmack, who was the driving force behind both first-person shooters “Doom’ and “Wolfenstein 3D”,  was not made available for comment by Oculus.

Mark Zuckerberg likes to finalize deals in a hurry. His three largest acquisitions as CEO of Facebook: Instagram, Oculus, and WhatsApp were each finished in a matter of weeks rather than months. This style epitomizes a past Facebook motto, “Move fast and break things.” It begs the question of whether or not this haste may have put Facebook Inc (NASDAQ:FB) and Zuckerberg in the thick of something it can’t control with regards to ZeniMax’s claims.

Facebook Inc (NASDAQ:FB) has yet to comment on the letters that were sent to it and its new acquisition Oculus and it’s not known if Facebook Inc (NASDAQ:FB) was aware of ZeniMax’s accusations.

In a statement, ZeniMax said it “sent formal notice of its legal rights.” It added: “ZeniMax believes it is necessary to address these matters now and will take the necessary action to protect its interests.” It is seeking compensation, according to people close to the company.

What started the dispute?

The row goes back to early 2012, when Mr. Carmack contacted the future founder of Oculus, Palmer Luckey who was working as part of a research group at the University of Southern California in Los Angeles.

Luckey sent a prototype of a VR headset that he was working on at the time to Mr. Carmack. Later that year, Carmack demonstrated a modified version of the headset at a ZeniMax booth at a gaming convention in Los Angeles. According to Carmack in a YouTube video, he introduced software to turn the prototype into a working product. Because he was working for ZeniMax at the time, the company believes it owns the rights to the prototype that it says was the bases of Oculus’s “Rift.”

It doesn’t appear that the acquisition of Oculus by Facebook Inc (NASDAQ:FB) prompted ZeniMax to seek compensation. According to sources close to the fight, ZeniMax began seeking compensation over the dispute in August of 2012. Since then, six ZeniMax employees including Mr. Carmack have gone to work for Oculus.


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