Who Really Owns Virtual Reality?

A recent lawsuit against Oculus, the virtual reality startup acquired by Facebook this year, highlights the futility of protecting computer code as corporate property.
Who owns this idea?                                                                       Photographer: Matthew Lloyd/Bloomberg

A lawsuit filed by computer-game company Zenimax against virtual-reality headset maker Oculus VR, Facebook's recent $2 billion acquisition, raises an interesting question: To what extent can companies claim title to intellectual property developed by their employees?

Zenimax wants Oculus to pay for headset technology developed by the latter's current chief technical officer, John Carmack, when he was employed by a Zenimax subsidiary called id Software. Carmack, one of the key developers of the Doom series, is something of a legend in the video-game industry. According to the lawsuit, in 2012, Carmack made the acquaintance of Palmer Luckey, a "college-aged video game enthusiast" who had assembled " a primitive headset" he called the Rift which he wanted help improving. The way I read it, Carmack, who had seen and tried all the imperfect VR devices of the 1990s, became passionate about Luckey's hardware ideas and about adapting them for his company's games, above all Doom and Rage.

Luckey went on to co-found Oculus VR. Carmack joined him, apparently because he felt he couldn't pursue the virtual-reality incarnation of his iconic games at Zenimax. Zenimax wasn't interested in working with Oculus unless it got a larger stake in the company than the meager 2 percent that Luckey was offering. "When it became clear that I wasn't going to have the opportunity to do any work on VR while at id Software, I decided not to renew my contract," Carmack told USA Today in February.

Carmack's situation reminds me of Sergei Aleynikov, the Russian programmer whom Goldman Sachs pursued in the criminal case that Michael Lewis researched for his latest book, ``Flash Boys.'' Aleynikov worked on the bank's high-frequency trading platform, then was hired by a company called Teza Technologies to build a new one from scratch. Goldman sicced the FBI on its former employee on the grounds that he had e-mailed himself, and uploaded to an outside repository, some pieces of code. Much of the code was open source and not useful for the new platform, but Goldman Sachs insisted that all of Aleynikov's work done while employed by the company was its property. He was sentenced to eight years in jail in December 2010, and freed after 11 months in prison when the conviction was overturned on appeal.

The big difference is that Zenimax doesn't want the infamy of going after a legendary figure like Carmack. It wants money, so it is suing Oculus instead. This is as morally questionable as bringing criminal charges against Aleynikov. Companies should be content with the work programmers and other creators do for them. They shouldn't try to limit their ability to pursue other projects to which their work might lead them. Learning is a major part of any creative process, and an employer can't make a coder, designer, hardware specialist or research scientist unlearn the skills accumulated during employment.

In fact, it may even make sense to stop protecting intellectual property produced with little more investment than the employee's salary. Computer code is a prime example. As Carmack, an open source enthusiast, wrote in a 2005 forum post:

Getting a patent is uncorrelated to any positive attributes, and just serves to allow either money or wasted effort to be extorted from generally unsuspecting and innocent people or companies. Yes, it is a legal tool that may help you against your competitors, but I'll have no part of it. Its basically mugging someone.

While Apple and Samsung go at each other in costly and largely ineffective patent litigation, their competitors are gaining market share. Litigation is a waste of time. The ability to hire and retain top talent is much more important for companies than the ephemeral protection provided by legal clauses. Zenamax, too, would have gained more from a preferential agreement to sell its games on the Rift platform than it can ever win in court. It would probably have kept Carmack, too.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.