Intellectual Property Attorney

‘The Hobbit’ Franchise Spawns Lawsuit Over Revenue

According to the lawsuit, in 1998, after spending over $10 million to develop a film adaptation of Tolkein’s books, , the Weinstein brothers and Miramax sold New Line Cinema the film rights to Tolkien’s four books: The Hobbit: Or there and Back Again and the three books comprising
The Lord of the Rings trilogy. According to the allegations, New Line agreed to pay “contingent compensation”, including, “5% of gross receipts of the ‘first motion picture’ based on the books, but specifically excluding any contingent compensation for ‘remakes'”. Miramax was due to receive “5% of the gross receipts of theatrical and television exploitation…, on a basis no less favorable than that accorded to Peter Jackson, the director of the films…”. The Weinstein brothers allege they are due 50% of Miramax’s share (or 5%) of the gross receipts.

The issue surrounds defendants’ election to divide the film adaptation of The Hobbit: Or there and Back Again into three separate installments. Each of the three books comprising
The Lord of the Rings trilogy had been made into separate movies, i.e., none of the three books were broken down into “installments”. The Complaint alleges: “Now that it has elected to split
The Hobbit into three installments, Warner claims that Plaintiffs may share only in revenue from the first installment of the film … and [has] refused to pay Plaintiffs any compensation derived from the second or third installments….” In other words, Warner Bros. appears to claim that the “second and third installments” are “remakes” for which plaintiffs should receive no compensation.

Among other things, the Complaint alleges causes of action seeking: (i) a declaratory judgment that defendants must pay portions of the revenue related to the second and third installments of The Hobbit and (ii) breach of contract (alleging damages that are expected to exceed $75 million).

On January 10, defendants filed a motion to dismiss the complaint which is now pending.

The case is Miramax, LLC, et al v. New Line Cinema Corporation, et al, Index No. 161383/2013, in the Supreme Court of the State of New York, New York County.

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