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.

31 Comments

  1. int says:

    Carmackgeddon continues!

  2. Lobotomist says:

    I would love to hear the whole story about all those lawsuits, and whats truly behind it – from someone that understands the industry.

    To me it sounds like panicked ( and extremely aggressive ) attempt to salvage some money from failing technology.

    • mattevansc3 says:

      There’s a lot of he said, she said but what I can gather from this is;

      Palmer created a barebones VR prototype that substituted expensive lenses for cheaper wider lenses but this caused heavy blur/distortion around the edges.

      Carmack saw this at a trade event and asked for a prototype.

      Palmer sent him the prototype and whilst on his own and company time and using company tech, Carmack fixed the blurring issue.

      With Zenimax’s agreement Carmack and other Zenimax employees could assist Occulus. They could also use Zenimax tech but only under an NDA.

      Zenimax took Occulus to trade events to co-promote the Rift.

      Oculus started their Kickstarter where Palmer claimed full responsibility for designing the Rift and also included documentation on how to use Zenimax tech as part of their SDK even though it was covered by the NDA.

      As the Kickstarter was succeeding Zenimax put in an offer for 10-15% of Occulus.

      Palmers response was to ask for considerably more for 1%.

      Zenimax “counter-offered” by pulling all support and telling Carmack to stop working with Occulus.

      Carmack’s response was to not renew his contract with Zenimax and go work with Occulus.

      There’s the claims of Carmack taking Zenimax tech with him and wiping drives

      Carmack then proceeded to “poach” Zenimax employees.

      Facebook bought Occulus and that’s when the lawsuits started.

      • Elric666 says:

        My heart goes out to Carmack because I fully understand the urge to just do and work on the things that interest you, naturally, without all the legal red tape and bureaucratic bull wearing you down.
        But from a legal standpoint it sounds like Zenimax is in the right.

        • rochrist says:

          Not in refusing to honor the sales agreement they made to purchase ID.

    • timsmith says:

      Super Bunnyhop did a decent video about the ZeniMax v Oculus trial.

  3. Paul says:

    Blows my mind how scummy Zenimax is. It is just next level scum. And it is nothing new for them either.

    • Baines says:

      Zenimax hasn’t actually refused to pay Carmack.

      Zenimax presumably wants to pay as little as possible in meeting their legal obligations to Carmack, which is understandable from both a pure business view as well as the view that Carmack “wronged” them. Carmack wants to force Zenimax to pay him in a time and a manner that will guarantee him a much larger sum, even though the exact legal obligations might allow Zenimax to pay less.

  4. DeanLearner says:

    and eyebrow-waggling claims that he was Googling about how to wipe hard drives shortly before he left Zenimax.

    What’s being insinuated here? That he was looking to destroy source code or something?

    To me it makes sense to clear up before you leave?

    • ThePuzzler says:

      You might also want to wipe a hard drive thoroughly because there’s incriminating evidence on it, I suppose?

    • frightlever says:

      It’s was established during the trial that Carmack COPIED code off id computers just before leaving the company. The fact he wasn’t found guilty of anything, per se, may have more to do with Zenimax seeing Facebook/Oculus as the bigger target. I would expect Zenimax to go after Carmack personally if this escalates. They seem to have a case against him that’s worth investigating.

      It amuses me to see people coming down on Zenimax over this, when Facebook and Oculus are sociopathic corporate entities, and Carmack isn’t far behind.

      • syndrome says:

        @frightlever
        Are you fucking sure you want to compare the faceless and unscrupulous Zenimax-Incorporated-tie-and-suit-board-of-chairmen-and-directors with one Mr. John Carmack who is de facto programming genius, engineer, and gaming visionary, who actually did the most of technological marvels we all take for granted, all while businesspeople thought he was mad, and who’s not afraid of having an opinion amidst the cold and sleazy business demons?

        What is obvious to me in this case is that he was under pressure to get a backup from someone as powerful as Zenimax itself. Hence the necessary evil. For years I couldn’t tell why he had to reach out to Facebook, and voila, there’s your answer. To fight demons with demons.

        • mattevansc3 says:

          I think somebody needs to calm down a bit.

          Yes Carmack pioneered a lot but that does not get away from the fact that after being paid to work with another company on a personal project and that company screwed his bosses over he jumped ship and sided with that company.

          Carmack was even blatant in his tweets about using Zenimax tech in the Rift and still defended Occulus when they said they weren’t using Zenimax tech.

      • ButteringSundays says:

        “It amuses me to see people coming down on Zenimax over this, when Facebook and Oculus are sociopathic corporate entities, and Carmack isn’t far behind.”

        Classic psychology tbh.

        Zenimax represent a risk to the success of a product these people like; therefore they are the bad guys.

        I’m not even saying they’re wrong (I have no idea), but they’d think it regardless.

        But yea, I struggle to see Facebook on the good side of any story; it’s not really their MO.

    • Chaoslord AJ says:

      In most contracts stuff you create while working for someone belongs to the company. If you wipe the disks they can sue you and might be in the right.
      Which brings up the question whether they got no backups as a software company. Maybe he worked on his own gear that would make things difficult.

      • Sleepy Will says:

        In most contracts, that clause in unenforceable, except in the most tinpot kangaroo of countries.

    • dethtoll says:

      Not to mention this is Carmack — he would likely already know how to do such a thing.

  5. Ghostwise says:

    They say “faithless and lacking in remorse” as if it were a bad thing. How odd.

    • eightbitrobot says:

      I don’t think anyone who’s read Masters of DOOM would disagree.

      RIP Mitsi.

      • Ghostwise says:

        That cat understood “taking the piss” way too literally.

  6. baseless_drivel says:

    People get older, but they rarely seem to ever grow up.

    We go from childish hitting, to juvenile sarcasm, to passive-aggressive legal word choice, squabbling over petty things.

    Sure, $22 million seems like a lot from our perspective, but to a tantrum-raging child, that candy or toy is a really big deal too.

    I’m no expert, but I’m betting $22 million won’t seem like such a great deal when you’re on your deathbed. Maybe you can use it to buy a golden sarcophagus and pay for the extra-deluxe embalming?

    For all his past cock-swagger, for what it’s worth, at least Romero has (mostly?) humbled himself making small-studio games and such. Or maybe he hasn’t changed that much, but he did at least help his own kid make and sell a game — I can’t really see him as being too much of a dick anymore.

    • Snowskeeper says:

      Pretty sure $22 million is enough to buy a spot in a cryonics project.

    • Baines says:

      Romero burnt himself pretty bad long ago. He never really attempted to repeat Daikatana, which implies he learned something and did change over the years.

      Heavens know that there are developers that would have followed the mistakes of the Daikatana era with equally grandiose or even escalating no-lessons-learned failures. At the same time, Romero hasn’t simply vanished either.

      Is this however Carmack’s first really big PR/personality disaster? I don’t recall Carmack ever getting checked the way Romero was until now. Carmack’s been largely golden, with the biggest complaint against him being that he talks for a long time.

    • rochrist says:

      So he’s the dick for wanting Zenimax to live up to the sales agreement they made when they purchased ID?

      • manny says:

        This is actually more about the damage done to the Carmack brand, people respect his technical ability and him not doing anything overtly stupid or annoying in a industry known for that. Now he has this over his head, getting paid what he is due will put Zenimax in the wrong and help clear his name a little.
        I would actually say this has been pushed by Facebook, whose major win was getting Carmack on their team, since their tech is most inferior in this battle, but with Carmack on their side they have a good chance.
        They were and still are planning to say ‘John Carmack legend in the gaming industry is developing this tech to be the best there is” and people will be like “john carmack is working on this? probably gonna be good” instead of the unpopular among masculine males that is facebook.

  7. lglethal says:

    Wait if I read that right he’s attempting to sue someone for not buying back his shares before the due date for them to buy back the shares has passed? WTF?

    Admittedly, if it gets to the buy back date and they havent bought them, then go hog wild and sue. But you cant pre-emptively sue someone because they might not buy them…

    It sounds to me like share prices have tanked and he wants to get the old price rather than the current price. Good luck with that one – its called market forces!

    • Premium User Badge

      geoffreyk says:

      Depending on whether or not this whole thing was structured like some kind of reverse stock option, it may be that the price was locked-in at the time of issuance, rather than the current market price. Without seeing the details of the agreement (which we may never: I’d be this is lawfare to force a favorable out-of-court agreement), we can’t know if the $45 price had been locked-in.

  8. Hypnotron says:

    WHAT?! They sold id Software for a paltry $150 million dollars?!

  9. racccoon says:

    Zenimax did the right thing they won a right.
    VR is a gimmick.
    John on the other hand just wants something he doesn’t have more of..when John Carmack was 14 according to wiki, he broke into a school to help a group of kids steal Apple II computers. To gain entry to the building, Carmack concocted a sticky substance of thermite mixed with Vaseline that melted through the windows. However, an overweight accomplice struggled to get through the hole, and opened the window, setting off a silent alarm and alerting police. John was arrested, and sent for psychiatric evaluation. end of story.