Harvey Weinstein Sues for 'Hobbit' Sequels Profits of $75 Million

Newsflash from your Hollywood Attorney:

Harvey Weinstein has made good on his threat to file a lawsuit against Time Warner, studio Warner Bros. and its New Line division over claims to a percentage of revenue from the next two Hobbit films. UPDATED: The move comes on the heels of escalating tensions between the two camps, including Warner Bros. and its New Line division initiating arbitration proceedings.

As Warner Bros. prepares to release The Hobbit: The Desolation of Smaug on Friday, The Weinstein Co. filed a lawsuit late Tuesday night in New York Superior Court. The Weinstein complaint asks for $75 million.

The move comes on the heels of escalating tensions between the two camps. The Weinsteins, repped by attorney Bert Fields, and the studio began trading nasty letters in November. As THR first reported, Warner Bros. and its New Line division initiated arbitration proceedings against Miramax on Nov. 26 over former owners Harvey and Bob Weinstein's claims to a percentage of revenue from Smaug and its follow-up, The Hobbit: There and Back Again.

Warner Bros. says in a statement: "This is about one of the great blunders in movie history. Fifteen years ago, Miramax, run by the Weinstein brothers, sold its rights in The Hobbit to New Line. No amount of trying to rewrite history can change that fact. They agreed to be paid only on the first motion picture based on The Hobbit. And that's all they're owed."

With last year's The Hobbit: An Unexpected Journey, the Weinsteins collected $12.5 million, or 2.5 percent of first-dollar gross of the film's $1 billion haul, according to a studio source (the studio typically splits box-office receipts with exhibitors).

The Weinstein cut was the result of an agreement inked in 1998 when the brothers owned Miramax, which once controlled film rights to the J.R.R. Tolkien fantasy and its sister property The Lord of the Rings. THR obtained a copy of the original Hobbit contract can be read here:  http://www.hollywoodreporter.com/sites/default/files/custom/Documents/ESQ/Miramax_Quitclaim_Agreement.pdf , which contains language that arguably could support both interpretations.

Though the brothers had nothing to do with the production of the Lord of the Rings films, a source says they did put up early seed money, including $10 million to help director Peter Jackson start special-effects house Weta, which became instrumental in making the three Lord of the Rings films at a modest budget (the trilogy earned some $3 billion at the box office worldwide.

The Weinsteins contend that they and Miramax are entitled to a piece of all Hobbit films. But Warners' position is that the contract limited the Weinsteins merely to a cut of the first Hobbit, not its two sequels.

If New Line and Warners are forced to pay the Weinsteins again, they would dole out roughly 5 percent of Smaug's first-dollar gross to Miramax, which then would split that sum with the Weinstein brothers. Other stakeholders in the property include the estate of author Tolkien and producer Saul Zaentz.

Warners has retained Evan Chesler at Cravath Swaine & Moore in New York and John Spiegel at Munger Tolles & Olson in Los Angeles.

Source.... http://www.hollywoodreporter.com/thr-esq/weinsteins-file-lawsuit-time-warner-664951

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Harvey Weinstein Threatens to Sue Warner Bros. "Hobbit 2"

Newsflash from your Hollywood Attorney:

On the heels of the fight over "The Butler," the studio's lawyers are disputing the mogul's legal letters claiming he's entitled to a 2.5 percent cut of the sequel's box-office take.

Five months after Warner Bros. and Harvey Weinstein fought over The Butler, they're at it again.
At issue is whether Weinstein and brother Bob are entitled to a cut of The Hobbit: The Desolation of Smaug. Sources tell THR that lawyers for the studio and the indie mogul have been exchanging nasty letters in recent weeks over the Peter Jackson-directed sequel, set for release Dec. 13 from WB's New Line division and MGM. The Weinsteins, repped by attorney Bert Fields, believe they're owed a piece of Smaug similar to what they reaped from last year's The Hobbit: An Unexpected Journey -- a figure that a studio source pegs at about $12.5 million, or 2.5 percent of first-dollar gross of the film's $1 billion haul (the studio typically splits box-office receipts with exhibitors).

The Weinstein cut is thanks to Bob and Harvey's previous ownership of Miramax, which once controlled film rights to the J.R.R. Tolkien fantasy. (A source says that Miramax even provided $10 million in early seed money for Jackson's Lord of the Rings trilogy.) But Warners' position, according to sources, is that the Weinsteins are entitled only to a cut of the first Hobbit, as the original terms of the deal state, not its two sequels. Now the Weinsteins are mulling filing a lawsuit.

All parties -- which also include Miramax, New Line and Hobbit co-financier MGM -- are barred from discussing the participation agreement of the first Hobbit film thanks to a confidentiality order imposed by a judge during arbitration. If the studio is forced to pay again, it would dole out roughly 5 percent of Smaug's first-dollar gross to Miramax, which then would split that sum with the Weinstein brothers. Other stakeholders in the property include the estate of author Tolkien and producer Saul Zaentz.

An insider says the company is prepared to fight to the last dollar over what it believes is its rightful cut of Smaug and next year’s The Hobbit: There and Back Again. In his battle with Warners over the title The Butler, Harvey drew a connection with the Hobbit duel. "I was asked by two execs at Warner Bros., which I'm happy to testify to, that if I gave them back the rights to The Hobbit they would drop the claim," Weinstein told CBS This Morning in July.

But a Warner Bros. source scoffs at the idea that there is any link between the two cases: "This is an issue between New Line and Miramax. Harvey is just a third-party participant." Warners and The Weinstein Co. declined comment.

Source... http://www.hollywoodreporter.com/thr-esq/hobbit-desolation-smaug-harvey-weinstein-661943

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Open Evenings and Weekends this Summer
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Warner Brothers Sued by Filmaker Mike O'Dea for "The Ghostman", identical elements from a "Hobbits" lawsuit.

Mike O'Dea says he's been working on a film with "identical" elements since 2010 and is drawing inspiration from a "Hobbits" lawsuit.

From the department of unintended consequences comes a lawsuit against Warner Bros. over The Ghostman, a planned film adaptation of Roger Hobbs' novel about a fixer who aids bank robbers in disappearing after botched heists.

Warners acquired film rights to the novel last year in a six-figure deal, and it's being developed by Kevin McCormick's Langley Park Pictures (The Gangster Squad). The film project hasn't advanced very far yet but it has already drawn a complaint in Massachusetts federal court from a screenwriter who says he's also been working on a heist thriller movie titled Ghostman.

Mike O'Dea, the plaintiff, alleges copyright infringement and violation of the Lanham Act from Warners' "use of the identical theme, central character and title."

Never mind that the film hasn't come out. O'Dea, who says he is in post-production on his own work, is pointing to Warners' recent lawsuit to stop a film with the word "Hobbits" in the title.

Last November, Warners sued Global Asylum, makers of the low-budget "mockbuster" Age of the Hobbits for attempting to trade off the release of its own The Hobbit: An Unexpected Journey. The following month, a federal judge enjoined the distribution of the defendant's film despite arguments that "Hobbits" existed separately from J.R.R. Tolkien's creation and was protected by fair use.

As Isaac Newton's third law of motion states, for every action there is a reaction.

Hollywood studios are well accustomed to defending lawsuits over stolen ideas, but almost always, it happens after some film or TV show has come out. Now, the lesson that O'Dea's lawyer Timothy Perry is drawing from the Hobbit case is that it's open season for lawsuits over yet-to-be released works.

According to O'Dea's lawsuit, Warners was sent a cease-and-desist letter but never responded.

"Warner Brothers failed to respond despite previously filing a similar suit against a competitor for use of the term 'Hobbit' in the title to a film shortly before the release of one of its J.R.R. Tolkien movies," says the lawsuit, which then goes on to reprint in boldface the studio's victory statement about prevailing against Asylum's "cynical business model... designed to profit from the work of others."

O'Dea (suing under his real name Michael Kenney)

Read Full Complaint ... http://www.scribd.com/doc/138876083/Ghost-Man

Read More... http://www.hollywoodreporter.com/thr-esq/warner-bros-sued-by-filmmaker-450165

Claims from Warners Brothers Tolkien Estate Breached 'Hobbit' Contract

The studio alleges that repudiation of online game rights not only cost it millions of dollars but also decreased exposure for "Hobbit" films.

Warner Bros. is going after the estate of author J.R.R. Tolkien hard in litigation over online slot machines and games tied to the lucrative Lord of the Rings and Hobbit properties.

In November, the Tolkien estate and its book publisher HarperCollins filed an $80 million lawsuit that claimed that Rings/Hobbit producers including Warner Bros. had infringed the copyright in the books and breached a contract by overstepping their rights.

Rings/Hobbit rightsholder Saul Zaentz Co. already made its own counterclaim that the Tolkien estate has breached an implied covenant of good faith and fair dealing by going down this road.

Now, it's Warners' turn.

The studio, represented by pit bull attorney Daniel Petrocelli, is striking back at the estate of the revered fantasy writer, who died in 1973, with amended counterclaims that allege the Tolkien estate's repudiation has cost Warners to miss out on millions of dollars of licensing opportunities. The studio demands damages for the alleged breach of contract.

Read Court Filing here... http://www.hollywoodreporter.com/sites/default/files/custom/Documents/ESQ/hobbitcounterclaim.pdf

Warners says it and Zaentz are the successors-in-interest to merchandising and other rights to The Hobbit and The Lord of the Rings from a United Artist agreement from 1969. The studio says it has been exploiting the rights for some time, and that 16 years ago, the parties confirmed that Zaentz had rights to online video games.

Attorney for Tolkien estate, responds:
                        "The defendants’ amended counterclaims are nothing more than an effort to sue the Tolkiens and HarperCollins for suing them. They are entirely without merit and are a classic example of studio “bullying tactics.”  The Tolkiens and HarperCollins filed this lawsuit in order to force WB and Zaentz to live within the boundaries of the contract to which they agreed. WB’s and Zaentz’s amended counterclaims are simply an attempt to punish the Tolkiens and HarperCollins for having the nerve to stand up to the studios and tell them that they can’t take more rights than were granted to them by contract. Luckily, the law protects people like the Tolkiens and HarperCollins from these kinds of intimidation tactics."

Read More... http://www.hollywoodreporter.com/thr-esq/warner-bros-claims-tolkien-estate-428390

'Hobbit' Slot Machine Countersuit

In November, Tolkien's heirs and and its book publisher HarperCollins filed an $80 million lawsuit that alleged that Rings/Hobbit producers including Warner Bros. had infringed the copyright in the books and breached a contract by overstepping their rights. The plaintiffs alleged that a decades-old deal only covered "tangible" merchandise, not stuff like slot machines.

The Saul Zaentz Co. has now brought counterclaims.

According to court papers filed earlier this month, Saul Zaentz Co. says that agreements struck in 1969 "impose no restriction whatsoever on the nature of the products, services, or businesses with with Zaentz's and its licensees' films may be associated, except for a limitation on certain print publications not at issue."

Zaentz also says that it and Warners have been exploiting online video games and gambling without objection for a long time -- and that in 1996, the parties confirmed rights to online video games.

A declaration that Zaentz has the right to use Tolkien marks in connection with games, hotels, restaurants, travel agencies, ringtones and more is now being sought.

In addition, the countersuit includes a claim that the Tolkien estate has breached an implied covenant of good faith and fair dealing.

Read Full Document: http://www.scribd.com/doc/123187959/Rings-counterclaims
Read More... http://www.hollywoodreporter.com/thr-esq/hollywood-docket-hobbit-slot-machine-417117