January 5, 2014
With all the rumours running around the interwebs lately about the latest Hobbit law suit and the claim that it could scuttle the release of The Hobbit: There and Back Again. We asked attorney Douglas C. Kane, who posts here on TORn as Voronwë the Faithful on our Message boards, if there was any truth to these rumours.
COULD THE FINAL HOBBIT FILM BE SCRAPPED OR DELAYED BECAUSE OF RECENT LITIGATION? NOT A CHANCE
by Douglas C. Kane (aka Voronwë the Faithful)
As is often the case when a lot of money is involved, the films created by Peter Jackson and his colleagues for New Line Cinema and Warner Brothers have generated a lot of litigation. Saul Zaentz, who owns the film rights to both The Lord of the Rings and The Hobbit (the latter with some complications involving distribution rights owned by MGM), and licensed those rights to New Line (and through them, to Warner Brothers) sued New Line twice, in 2004 and 2007, regarding disputes about his share of the royalties from the Lord of the Rings films. Peter Jackson himself sued New Line in 2005, claiming that he had not been paid his full share, and some of the actors in New Zealand made similar claims against the company. But the biggest lawsuit to date, was the lawsuit filed by Tolkien’s heirs and publisher against New Line, claiming that they were not paid any of the royalties due to them. This litigation was the most concerning to fans because in addition to seeking monetary damages, the attorneys for the plaintiffs claimed that a clause in the agreements in which the film rights had been sold by Tolkien allowed them to prevent the upcoming Hobbit films from being made, if they did not get satisfaction. Fortunately that case, like the others, was settled out of court, and the Hobbit films moved forward. Another dispute between the Tolkien heirs and publishers and the filmmakers also has arisen regarding other rights such as online video games and casino slot machines, but that litigation (which is currently on hold while a court ruling is appealed) is separate from the films, and no there has been never been a suggestion that that case will have any effect on the films.
Enter the Weinsteins. Harvey and Robert Weinstein were the former owners of Miramax Films, who were originally going to back Jackson’s Lord of the Rings films. However, they decided that they only wanted Jackson to make one film based on that 1200-page book, and Jackson balked at that. Once New Line agreed to back the project (with Robert Shay famously saying “aren’t there three books? Why not make three films?”), the Weinsteins agreed to transfer the licence agreement that they had entered into with Saul Zaentz for options to make films based on both The Lord of the Rings and The Hobbit to New Line (and hence to Warner Brothers, when it bought out New Line). There was no problem with the Lord of the Rings films; Harvey and Bob were paid millions for allowing Jackson to make his films for a different studio. However, a dispute arose over the Hobbit films based on a clause in the quit claim agreement transferring the license agreement to New Line which Warner Brothers interpreted (accurately, in my opinion, though it is always difficult to predict how a judge, jury or arbitrator will rule about something like this) as requiring that they only pay the Weinsteins and Miramax royalties on the first of the three planned films based on The Hobbit. Predictably, the Weinsteins and Miramax sued, claiming that the sole reason that Warner Brothers, New Line (and Peter Jackson) split the project into three films was to deny them their rightful profits. Warner Brothers responded that the clear language of the agreement only required them to pay royalties on the first film (which did, after all, make over a billion dollars worldwide, resulting in another hefty payment to Bob and Harvey), and further asserted that the dispute was covered by a limited arbitration agreement, and therefore should be resolved in an arbitration covering the same issues that they had already initiated before the lawsuit was filed.
The Weinsteins and Miramax then brought a motion claiming that the arbitration agreement did not cover this dispute, and that it should be resolved in open court (Warner Brothers filed a response to this motion, and a counter motion to compel arbitration). For some reason, in response to the bringing of the Weinstein’s motion, a slew of news reports have arisen, suggesting that as a result of this litigation, There and Back Again, the third and final Hobbit film could be delayed or even “scrapped”. This “story” appears to have originated at a site called Radar Online, which posted a piece on the day after Christmas entitled “Could The Final ‘Hobbit’ Film Be Scrapped? Inside The Secret Legal Battle Over The Movie’s Release.” After detailing the dispute and the latest filing by the Weinsteins, the author of the story then makes a leap into speculating “Could the legal wranglings delay the debut of the final Peter Jackson flick or even cause it to be scrapped altogether?” However, this speculation is not based on any actual facts. The only “evidence” they point to is the fact that the release date of There and Back Again had previously been changed from June to December 2014 (even though that had nothing to do with this or any other litigation), and to the litigations involving the Tolkien heirs, though they conflate the previous case, which had threatened to scuttle the Hobbit films, with the current case, which does not. This story then got picked up by numerous other online sites, all of which simply repeat or refer to the Radar Online “story”.
In fact, there is no factual or legal basis that supports this speculation whatsoever. The Complaint filed by the Weinsteins and Miramax asks for only two things: (1) a declaration that they are entitled to compensation for the second and third Hobbit films; and (2) damages in an amount exceeding $75 million for failing to pay compensation for the second and third films. That is it. Unlike the previous litigation involving the Tolkien heirs and publisher, there is no request for an injunction seeking to stop or delay the films. There is no mention in any of the court documents filed by the attorneys for the Weinsteins and Miramax that indicates that they have any interest in or desire to delay or scrap the third film. On the contrary, it would be against their interests to do so, since their entire case is predicated on the argument that they are entitled to a share in the profits of the second film (which is already released, and is likely to approach or exceed the billion dollar threshold again) and the anticipated third film (which could well make more money than either of the first two).
This is nothing more than a journalist (in the loosest possible sense of the word) making a sensationalist statement in order to attract attention, despite the fact that the statement has absolutely no basis in reality. Fans of Peter Jackson’s Middle-earth films (or even those who revel in criticizing them) have nothing to worry about; come December 17, 2014, Bilbo Baggins will go There and Back Again (or if he doesn’t, it will have nothing to do with this lawsuit).