Breaking: Oculus CTO John Carmack Sues Bethesda’s Parent Company ZeniMax For $22.5 Million

The feud has been re-ignited. Oculus CTO, John Carmack, has sued Bethesda’s parent company ZeniMax for $22.5 million. In a recent lawsuit, ZeniMax was been awarded $500 million from Oculus over IP infringements, specifically for mishandling non-disclosure agreements.

John Carmack and his team have filed a complaint which alleges ZeniMax has refused to make the final payment from the $150 million purchase of id Software by ZeniMax back in 2009. id Software was the company that John Carmack co-founded, which birthed the famous franchise, DOOM.

In the complaint it states the following:

“When ZeniMax bought id Software in 2009, it agreed to pay a total of $150 million for that purchase. Now that the final installment of that bill is coming due, ZeniMax is simply refusing to pay. But sour grapes is not an affirmative defense to breach of contract. This court should enter judgment against ZeniMax for all the money that it agreed to pay Mr.Carmack for the sale of his former company.”

In a statement prepared for public media ZeniMax responded with the following:

We have reviewed John Carmack’s latest legal complaint which is completely without merit.

We note that this is Mr. Carmack’s second complaint against ZeniMax. In the recently completed trial of ZeniMax Media Inc. et al v Oculus VR et al, in which Mr. Carmack  was a named Defendant, and in which ZeniMax was awarded $500 million in damages for misappropriation of its intellectual property, Carmack had counterclaimed, seeking damages for ZeniMax’s alleged violations of his employment agreement. The jury flatly rejected Mr. Carmack’s complaint, and found for ZeniMax.  Mr. Carmack was personally found guilty by the jury of the theft of ZeniMax’s property, including thousands of confidential ZeniMax documents he secretly took when he quit his employment, and his theft of the entire source code to id’s latest game, RAGE, including the id tech 5 engine. In addition to those crimes, it was revealed by an independent court-appointed computer forensics expert, that upon receiving notice of the Oculus lawsuit, the files on Mr. Carmack’s Oculus computer were intentionally wiped–destroying the evidence, and that a sworn affidavit Carmack filed with the Court denying the wiping was false. The wiping occurred right after Mr. Carmack researched on Google how to wipe a hard drive. And there was much more.

Apparently lacking in remorse, and disregarding the evidence of his many faithless acts and violations of law, Mr. Carmack has decided to try again. We look forward to presenting our response to Mr. Carmack’s latest allegations in Court.

Here are some facts stated in the complaint:

On June 23, 2009, ZeniMax purchased the assets of id Software, Inc. and placed them into a newly created company, id Software LLC. From that day to the present, ZeniMaxhas been the sole owner of id Software LLC.

The sale was accomplished via an Asset Purchase Agreement, which obligated ZeniMax to pay id Software’s selling shareholders a total of $150 million for the sale. Of that sum, $45 million was paid in cash at closing. An additional $40 million was paid to the shareholders pursuant to cash promissory notes over the course of the next four years.

The final $65 million in consideration for the purchase came in the form of Convertible Promissory Notes, whereby ZeniMax agreed to pay the selling shareholders that amount in cash or shares of ZeniMax’s common stock. Each of the Convertible Promissory Notes permitted their holders to convert the notes to shares of common stock at any time prior to their Maturity Date, which was defined to occur upon the earliest of an initial public offering, a change of control, or the eighth anniversary of the closing of the sale of id Software.

At the time of the sale, Mr. Carmack was the majority shareholder of id Software,Inc., and his Convertible Promissory Note was issued with the face value of $45,118,094.77. In early 2011, Mr. Carmack converted approximately half of the original Convertible Promissory Note into shares of ZeniMax’s common stock. As a result, his original Convertible Promissory Note was canceled and replaced with a new Convertible Promissory Note in the amount of $22,559,047.77.

All of the common stock that Mr. Carmack has previously received under his Convertible Promissory Note, plus the stock that he has the right to receive in the future, is subject to a $45 per share put option under section 9.07 of the Asset Purchase Agreement. The put option will ripen no later than the eighth anniversary of the sale of id Software, which will occur on June 23, 2017.

This lawsuit is separate from the ongoing battle between Oculus and ZeniMax.