Palmer Luckey, founder of Oculus VR, used privy knowledge to create the VR headset prototype that exploded on Kickstarter and later resulted in his company's sale to Facebook for $2 billion, a lawsuit alleges.

Total Recall Technologies (TRT), which operates out of Hawaii, just filed a lawsuit in a U.S. district court in the Northern District of California. The filing states that TRT is demanding punitive and compensatory damages, although it didn't specify an amount.

In the suit, TRT alleges that it had multiple verbal contracts with Luckey and eventually had the Oculus VR CEO sign a non-disclosure agreement before two witnesses.

Partners Ron Igra and Thomas Seidl of TRT set out to develop virtual reality hardware back in 2010 and they approached Luckey for help, the lawsuit alleges [pdf]. TRT supplied the parts with which to construct a VR headset then Luckey later used what he learned to create the Oculus Rift prototype.

Luckey signed the non-disclosure agreement in 2011, the suit states. In 2011 and 2012, TRT provided Luckey with feedback that was used to improve the VR tech.

"Pursuant to the terms of the parties' contract, Luckey agreed, among other things, to maintain information received from Seidl in the strictest confidence and not to use confidential information received from Seidl for his own benefit," the lawsuit states.

TRT was eventually granted a patent after filing an application titled, "System and method for creating a navigable, three-dimensional virtual reality environment having ultra-wide field of view."

"Without informing the partnership, on information and belief, Luckey took the information he learned from the partnership, as well as the prototype that he built for the TRT using design features and other confidential information and materials supplied by the partnership, and passed it off to others as his own," the suit alleges.

The brewing battle with TRT isn't the first legal challenge for Oculus VR. About a year ago, ZeniMax Media made a claim similar to the one made by TRT.

John Carmack, Oculus VR's chief technology officer, used privy information obtained during his time with ZeniMax to improve the Oculus Rift headset, according to ZeniMax. Oculus VR disputed those claims in a statement.

"By deliberately misstating some facts and omitting others, ZeniMax makes the incredible assertion that it, a videogame software publishing company for personal computers and consoles like the Sony PlayStation, invented and developed a virtual reality hardware and software system," said Oculus VR last year.