Report: Elder Scrolls parent company seeking compensation for Oculus Rift headset, Oculus calls claims "ridiculous"

[UPDATE 2] John Carmack has commented on the story, saying on Twitter: "No work I have ever done has been patented. Zenimax owns the code that I wrote, but they don't own VR. Oculus uses zero lines of code that I wrote while under contract to Zenimax."

[UPDATE] Following the publication of this story, a ZeniMax representative provided a detailed statement on today's Wall Street Journal report. You can read their statement in full below.

"ZeniMax confirms it recently sent formal notice of its legal rights to Oculus concerning its ownership of key technology used by Oculus to develop and market the Oculus Rift. ZeniMax’s technology may not be licensed, transferred, or sold without ZeniMax Media’s approval. ZeniMax’s intellectual property rights arise by reason of extensive VR research and development works done over a number of years by John Carmack while a ZeniMax employee, and others. ZeniMax provided necessary VR technology and other valuable assistance to Palmer Luckey and other Oculus employees in 2012 and 2013 to make the Oculus Rift a viable VR product, superior to other VR market offerings."

The original story is below.

A new report today from The Wall Street Journal outlines some controversy over Facebook's still-pending (but approved) purchase of Oculus VR, maker of the virtual reality headset Oculus Rift. According to documents obtained by the news publication, Fallout and Elder Scrolls parent company ZeniMax Media is claiming rights to the intellectual property that powers the Oculus Rift headset.

According to the report, ZeniMax lawyers have sent multiple letters to Oculus and Facebook, claiming former id Software (owned by ZeniMax) designer John Carmack, who joined Oculus last summer, "improperly took ZeniMax's intellectual property with him to Oculus." This technology, ZeniMax says, helped Oculus VR grow from a fledgling startup to a Silicon Valley darling in under two years.

"It's unfortunate, but when there's this type of transaction, people come out of the woodwork with ridiculous and absurd claims," an Oculus representative told The Wall Street Journal. "We intend to vigorously defend Oculus and its investors to the fullest extent."

The letters were sent following Facebook's surprise announcement last month that it would acquire Oculus VR in a massive deal worth $2 billion. Leslie Moonves, CEO of GameSpot parent company CBS Corp., is a member of the ZeniMax board of directors.

For its part, a ZeniMax representative said: "ZeniMax believes it is necessary to address these matters now and will take the necessary action to protect its interests." The company's letters to Oculus represented a "formal notice of its legal rights," according to the report. Sources close to ZeniMax said the company is seeking compensation.

The Wall Street Journal points out that it is unknown if Facebook knew before acquiring Oculus VR that ZeniMax was seeking compensation for the technology behind the Oculus Rift headset.

ZeniMax's dispute with Oculus dates back to early 2012, when Carmack reportedly contacted Oculus Rift creator Palmer Luckey. At this time, Luckey was experimenting with virtual reality headsets with a research group at the University of Southern California. Luckey, now 21, reportedly sent a prototype to Carmack.

Later that year at a "Los Angeles gaming convention," Carmack showed off a modified headset, the same headset that ZeniMax says was "the template for Oculus' Rift headset." The Wall Street Journal references an unspecified YouTube video where Carmack shows off this headset. Though it's not clear which video specifically they mean, Carmack demonstrated a virtual reality headset to numerous publications, including GameSpot sister site Giant Bomb, during E3 2012.

In this video, Carmack says he introduced new software to help the headset become a workable product. It appears it is this software that ZeniMax now claims ownership of. Luckey founded Oculus VR around the same time.

Finally, The Wall Street Journal says ZeniMax began seeking compensation for this intellectual property in August 2012, according to sources. Negotiations were reportedly held--on and off--for a period of about six months, and Oculus apparently even offered ZeniMax a "small equity stake." However, no deal was ever reached, sources said.

Carmack joined Oculus VR last summer, and five other ZeniMax employees followed, the report goes on. And just last week, ZeniMax penned a letter to Oculus VR's lawyers and Facebook's general counsel, saying: "It was only through the concerted efforts of Mr. Carmack, using technology developed over many years at, and owned by, ZeniMax, that Mr. Luckey was able to transform his garage-based pipe dream into a working reality," according to The Wall Street Journal.