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Carmack sues "bad faith" Zenimax for $22.5m

GIMME QUIDS

No-one’s coming out clean from the ongoing mud brawl between Bethesda owners Zenimax and Facebook subsidiary Oculus. After a court case in which the former alleged that the latter swiped trade secrets from them in order to create the Oculus Rift, Oculus ended up being told to fork out $500m for NDA breach. There’s also been an attempt to get the Rift pulled from sale, but in the meantime, a new challenger appears.

Former id Software ultro-brain and current Oculus mega-mind John Carmack, whose move between the two firms was at the centre of the case, is suing Zenimax for $22.5 million, citing “breach of its contractual obligations” resulting from its purchase of id. He alleges that they’ve not paid him because of “sour grapes” over the other case, while in response, Zenimax deem Carmack “lacking in remorse” and “faithless.” Gentlemen, please!
JC’s big bill relates to the sale of id Software, the first-person shooter studio he co-founded, to Zenimax back in 2009, for $150m. That figure was split between id’s shareholders, the major one of which was Carmack himself, and while he’s had tens of millions already, he argues he’s still due $22,559,047.77 of it. The nitty-gritty of all this involves a split between cash and Zenimax shares, but the long and short is that, he both wants that cash and claims that Zenimax is obligated to buy back the $22.5m in Zenimax shares he was already given as part of the id buy-out.

Claim his lawyers, “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.”

The sour grapes in question do, of course, relate to the Oculus court case. Though Oculus was found liable to some extent there, Carmack himself was not, despite various allegations that he illegally passed trade secrets to the Oculus lot and eyebrow-waggling claims that he was Googling about how to wipe hard drives shortly before he left Zenimax.

Nonetheless, in response to the case, Zenimax told The Dallas Morning News that “apparently lacking in remorse, and disregarding the evidence of his many faithless acts and violations of law, Mr. Carmack has decided to try again,” the statement said. They call the case “completely without merit”, though as yet do not appear to have given a reason for why they’ve not paid.

On that point, Carmack’s lawsuit claims that “ZeniMax’s invocation of the same alleged acts that it just went to trial on is an exercise in bad faith and distraction, not a legitimate basis to avoid paying the money it owes from its purchase of id Software.” Whoof.

An added wrinkle here is that ZeniMax may not have officially refused to pay up yet. The lawsuit includes statements such as “the highly likely event of ZeniMax’s upcoming refusal to honor the put option” and “seemingly inevitable refusal to honor its obligation to pay the remainder of the purchase price.”

As I say, the case also concerns Carmack’s allegation that Zenimax are obliged to buy back all his existing shares in them at $45 a pop by this June, and I wonder if this whole thing is really about ensuring he gets that price – he also wants the ‘unpaid’ $22.5m to also be given in shares, which Zenimax then have to buy back by June. I suspect that an even vaster sum hinges on that conversion. He demanded these shares last month, and Zenimax have apparently declined to do that, which has lead to this case.

All will come out in the wash once this goes to court, I have no doubt. Meanwhile, you can read the full lawsuit here.

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Alec Meer

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Co-founder of RPS. Dungeon Keeper & X-COM 4 Life.

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