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Warner Bros., Tolkien Estate Settle $80 Million 'Hobbit' Lawsuit

JULY 03, 2017 6:47am PT

Hollywood Reporter

  • JULY 03, 2017 6:47am PT by Eriq Gardner
http://www.hollywoodreporter.com/thr-esq/warner-bros-tolkien-estate-settle-80-million-hobbit-lawsuit-1018478
  • The five-year battle focused on a decades-old contract and newer exploitations.
After five years of litigation, Warner Bros. and the estate of author J.R.R. Tolkien have announced in court that they have amicably resolved a fight over the digital exploitation of The Hobbit and The Lord of the Rings.
The Tolkien Estate and book publisher HarperCollins filed a $80 million lawsuit in 2012 alleging that Warners, its New Line subsidiary and Rings/Hobbit rightsholder Saul Zaentz Co. infringed copyright and breached contract by overstepping their authority. The plaintiffs claimed that a decades-old rights agreement entitled the studio to create only "tangible" merchandise based on the books, not other digital exploitations that the estate called highly offensive.
The lawsuit brought the two sides into a new battle. Previously, New Line and the Tolkien Estate had fought over profit participation, coming to a deal in 2009 pegged as being worth more than $100 million. As Warner Bros. readied a Peter Jackson big-screen adaptation of The Hobbit, the Tolkien Estate began investigating digital exploitations when its attorney received a spam e-mail about the Lord of the Rings: The Fellowship of the Ring: Online Slot Game. The subsequent complaint filed in court talked about irreparable harm to Tolkien's legacy and reputation from the prospect of everything from online games to housing developments.
In reaction, Warners filed counterclaims, alleging that repudiation of a 1969 contract and 2010 regrant caused the studio to miss out on millions in Hobbit licensing and decreased exposure to the Jackson films. The studio contended that digital exploitations was both customary and within its scope of rights.
Those counterclaims became the subject of a side fight over whether Warners could sue for being sued. The 9th Circuit Court of Appeals agreed that the studio had properly asserted contract claims.
Meanwhile, the two sides engaged in brutally detailed discovery, with Tolkien heirs and others giving depositions about how the Rings/Hobbit business operates. There were witnesses also appearing about the intent of the 1969 agreement.
For the last couple of years, not much has publicly happened in the dispute. Both sides were due to file summary judgment motions in anticipation of a potential trial. That's been avoided with the sorcery of dealmaking. Terms haven't been publicly disclosed, though the forthcoming release of games like Middle-earth: Shadow of War are likely indication of a mutually agreeable working relationship.
In a statement delivered after publication of this story, a Warner Bros. spokesperson says, "The parties are pleased that they have amicably resolved this matter and look forward to working together in the future."

Variety

  • Warner Bros., Tolkien Estate Settle Massive ‘Lord of the Rings’ Lawsuit
Warner Bros. and the estate of J.R.R. Tolkien have resolved a rights dispute over “The Hobbit” and “The Lord of the Rings,” the two parties said in a court filing.
The settlement ends a legal scuffle that has pitted the film studio and the author’s heirs against one another since 2012. The conflict stemmed from the digital exploitation of the hobbits, wizards, elves, and other fantastical characters from the hit films in online slot machines and other games. The Tolkien estate and publisher HarperCollins alleged that the studio never had rights to license characters for these purposes. Warner Bros. countersued, claiming that the estate cost it “millions of dollars in license fees” from merchandising when it filed a legal challenge.
Terms of the settlement were not disclosed, but a legal filing said the two parties had resolved their differences “amicably.” It also stated that no fees or costs are to be awarded by the court and that no party is entitled to recover fees or costs.
A spokesman for Warner Bros. said in a statement to Variety, “The parties are pleased that they have amicably resolved this matter and look forward to working together in the future.”
An attorney for the Tolkien estate did not immediately respond to a request for comment.
The “Lord of the Rings” films won Oscars and generated big box office, but they have also been the source of ongoing litigation. In 2009, the estate and New Line, a division of Warner Bros., reached a settlement after the author’s representatives claimed the studio had bilked it out of millions of dollars in profits. That resolution allowed the studio to move forward with its trilogy of films based on “The Hobbit.”
It wasn’t the only legal fight over the riches generated by the movies. Following the blockbuster success of the “Rings” trilogy, director Peter Jackson sued New Line over profits that he claimed he was owed from the first film. He settled that case in 2007 and went on to direct “The Hobbit” films.

New York Times

  • Tolkien Estate and Warner Bros. Settle Lawsuit Over Licensing
Warner Bros. and the estate of J.R.R. Tolkien have settled an $80 million lawsuit over the digital merchandising of products from “The Lord of the Rings” and “The Hobbit.”
“The parties are pleased that they have amicably resolved this matter and look forward to working together in the future,” Warner Bros. said in a statement to The Hollywood Reporter.
Terms of the settlement were not disclosed.
The lawsuit, filed in 2012 by Mr. Tolkien’s estate, claimed that Warner Bros. was in breach of contract and also violating copyright infringement for merchandising characters from Mr. Tolkien’s books — and the subsequent successful film adaptations — beyond the scope of what was agreed to when the rights were sold in 1969, causing harm to Tolkien’s legacy.
In particular, the lawsuit pointed to an online gambling game, “Lord of the Rings: The Fellowship of the Ring: Online Slot Game,” the existence of which the author’s estate said it learned of through a spam email.
“Fans have publicly expressed confusion and consternation at seeing ‘The Lord of the Rings’ associated with the morally questionable (and decidedly nonliterary) world of online and casino gambling,” the lawsuit said.
The lawsuit said that the estate had only granted the right for Warner Bros. to sell “tangible personal property,” giving as examples “figurines, tableware, stationery items, clothing and the like.” It said it did not grant “electronic or digital rights, rights in media yet to be devised or other intangibles such as rights in services.”
Warner Bros. countersued, saying that it lost out on millions of dollars as a result of the lawsuit.

UK Mirror

  • JRR Tolkien's estate and Warner Bros settle £62 million lawsuit over Lord Of The Rings and The Hobbit rights
The author's estate said the studio overstepped the mark by producing video games and apps based on the books
JRR Tolkien's family have settled a £62 million lawsuit with Warner Bros over the rights of Lord Of The Rings and The Hobbit.
Priscilla Tolkien, the British author's daughter, and the estate teamed up with publishers HarperCollins to sue over merchandising rights.
On Monday, Warner said they have "amicably" resolved the legal battle that had lasted nearly five years.
Tolkien's estate argued that when they sold the rights to the films in 1969 merchandising of goods such as figurines, stationary and clothing was allowed.
But they said the studio overstepped the mark by producing video games and apps based on the books.
To make matters worse, they said, Warner "outraged" Tolkien's fans by using his characters in gambling games online and even planned to take them to casino slot machines.
They sued in California in November 2012 for damages exceeding 80 million dollars and asked for legal fees to be paid as well as the maximum rate of interest.
Warner counter-sued, claiming the estate had made an "about face" and had previously consented.
A Warner Bros spokesman said: "The parties are pleased that they have amicably resolved this matter and look forward to working together in the future."
The spokesman did not comment on the outcome of the settlement made on Thursday.
Legal papers showed Warner dropped the counter-claim and no parties were entitled to recover fees or costs.
Tolkien, an Oxford University professor, died in 1973 at the age of 81.

Reuters

The estate of J.R.R. Tolkien has settled an $80 million lawsuit against Warner Bros. over the licensing of online games, slot machines and other gambling-related merchandise based on the author's books "The Hobbit" and "The Lord of the Rings."
The settlement by the Tolkien estate and book publisher HarperCollins with the Time Warner Inc unit, New Line Cinema and Saul Zaentz Co, which hold various marketing rights, was disclosed in a court filing on Friday in Los Angeles.
It also resolves counterclaims by Warner Bros. and Zaentz. Terms were not disclosed.
"The parties are pleased that they have amicably resolved this matter and look forward to working together in the future," Warner Bros. spokesman Paul McGuire said in a statement on Monday.
Bonnie Eskenazi, a lawyer for Tolkien's estate and HarperCollins, which is a unit of News Corp, provided a nearly identical statement.
Tolkien's estate had accused the defendants of violating a 1969 agreement allowing the sale "tangible" merchandise, by associating the books with the "morally-questionable (and decidedly non-literary) world of online and casino gambling."
It said this "outraged Tolkien's devoted fan base" and irreparably harmed the legacy of the English author, who died in 1973 at the age of 81.
The copyright lawsuit was filed in November 2012.
Total worldwide grosses exceeded $2.9 billion for each of the big-screen trilogies for "The Lord of the Rings," released from 2001 to 2003, and "The Hobbit," released from 2012 to 2014, according to Box Office Mojo. (here)
The case is Fourth Age Ltd et al v Warner Bros. Digital Distribution et al, U.S. District Court, Central District of California, No. 12-09912.