Warner Bros says a multimillion-dollar merchandising lawsuit from the estate of Lord of The Rings creator J.R.R. Tolkien and publisher HarperCollins has hurt it financially, undermined its rights to the author’s properties, and it wants big bucks in damages. “Counterclaim Defendants are simply attempting to extract additional huge sums of money for rights and/or take back rights that they had already granted,” the studio says in documents (read them here) filed this week in federal court. While damages are not specified in the counterclaim, the request for a jury trial does state that Warner Bros lost millions in license fees because of the fallout from the rights dispute. The claims by the studio come almost five months after the Tolkien Estate Ltd, its trustees and News Corp-owned publisher sued Warners, its New Line subsidiary and The Saul Zaentz Company’s Middle-earth Enterprises division in an $80 million copyright infringement and breach of contract dispute over video games, online slot machines and other digital merchandising. That legal move occurred just under a month before the first movie in the Warner Bros-distributed and Peter Jackson-directed trilogy The Hobbit hit the big screen December 14. The Lord Of The Rings trilogy, directed by Jackson, has made almost $3 billion in worldwide box office.
Warners claims that the rights being contested by the estate and the publisher were worked out in a 2010 regrant deal and that the plaintiffs have even been receiving royalties under that agreement. The recent change of heart and circumstance by the plaintiffs has left Warner Bros not only miffed by what they consider a cash grab but also distinctly out of pocket, it alleges. “Warner has been significantly harmed as a result of Counterclaim Defendants’ breach of the 2010 Regrant Agreement. Counterclaim Defendants’ breach has severely hampered Warner’s ability to exercise the rights granted. For example, because of the repudiation, Warner terminated its online gambling license agreement with Microgaming. This cost Warner millions of dollars in foregone license fees and also required that Warner repay a significant sum to Microgaming to cover a portion of its development and advertising costs,” says this week’s filing. In 2009, the Tolkien Estate, HarperCollins and New Line came to an out-of-court settlement after the estate sued over profits from The Lord Of The Rings movies the year before. That settlement opened the door for Warner Bros, which had absorbed New Line in 2008, to make more Tolkien movies.
Bonnie Eskenazi, Ricardo Cestero and Elisabeth Moriarty of LA firm Greenberg Glusker represent the plaintiffs in this latest suit. Warner Bros, New Line and The Sau Zaentz Company are represented by Daniel Petrocelli, Victor Jih and Molly Lens of O’Melveny & Meyers.