Tolkien Trust Sues New Line, May Kill "Hobbit"

oboreruhito writes "The AP is reporting that the Tolkien Trust and HarperCollins are suing New Line Cinema for $150 million in compensatory damages, unspecified punitive damages, and a court order revoking New Line's rights to produce any more films on Tolkien properties. The Tolkien Trust says that New Line paid them only $62,500 to make 'The Lord of the Rings' trilogy of films — instead of the agreed-upon 7.5 percent of gross receipts of all film-related revenue. The suit may set back, if not kill, a film adaptation of Lord of the Rings prequel 'The Hobbit,' which Peter Jackson had recently signed up to make after his own legal row with the studio over payment for the sequels."

Comments

When will they learn...

[Lumpy]

Studios are scumbags. They do "creative" accounting so that no film ever makes money on paper. If you get suckered into accepting net points you will never EVER see a dime. Gross points are the real money and even then they find ways of hiding that money.

This is why you see lots of big actors and big name directors and talent working on more and more "indie" films. they actually get what they are promised from the indie companies.

Re:When will they learn...

[Zeinfeld]

Yeah the big actors are all hurting bad aren't they...

Jackson himself only got paid after he sued New Line. And then New Line refused to hire him for the Hobbit in retaliation.

Its not just that the people are crooks, they are stupid crooks. They kill the goose that lays the golden egg.

Tolkein sold the rights to the film version of TLORT to pay a tax bill. At the time the film could not have been made, the technology didn't exist to do it well on a realistic budget.

What New Line seem to have forgotten is that the contract had a royalty clause. They probably forgot because its stated in terms of profit and everyone knows that the films never make profits after the Holywood accounting and the California courts are owned by the studios.

Only problem is that the contract was signed in the UK and UK law does not favor the studios on this.

Re:When will they learn...

[morgan_greywolf]

You're missing something. The numbers that the studios publish and what they use on a contractual basis are probably two different things. The contracts usually specify how and when the 'net' is computed. They're not bound contractually by what they publish publicly. The problem is that stupid people often sign contracts without an attorney who is familiar with Hollywood looking it over.

re:when will they learn...

[ed.han]

what new line seem to have forgotten is that the contract had a royalty clause. they probably forgot because its stated in terms of profit and everyone knows that the films never make profits after the holywood accounting and the california courts are owned by the studios.

only problem is that the contract was signed in the UK and UK law does not favor the studios on this.

o, i doubt very much that they forgot. i think it was a calculated decision to save them (new line) money and force a drawn out litgation in which they will make an offer that will wind up costing them (again, new line) less than the royalties.

"competent courts" as a legal precept is probably very, very basic for IP lawyers, esp those employed by a studio like new line.

ed

Re:When will they learn...

[arminw]

........Actually, it would appear that Newline is a bunch of crooks.......

Probably no more than many other businesses and individuals breaking their promises nowadays. It used to be that people, and that includes companies run by them, would keep their word and promises. Big business deals were at one time sealed with a word and a handshake. Today, even a contract with more print than the phone book for a big city may not be honored.

People incurring debts and then abusing bankruptcy laws to get out of paying is no different. A couple breaking the promise of marriage, or a parent breaking a promise to their son or daughter is really no different, except in the amount of money involved. Breaking a promise these days is no longer considered by many, to be a big deal. It happens all the time and is considered normal by many.

Re:When will they learn...

[Sparky McGruff]

It's sort of like CBS and Viacom telling shareholders that online content is worth hundreds of millions of dollars (and suing YouTube for a billion bucks) and then telling the writers that online content doesn't make any money.

Old joke: Ask a math teacher, how much does five plus five equal, they say "10". Ask a hollywood accountant, they'll close the blinds, shut the door, and whisper "How much do you want it to be?"

Re:When will they learn...

[NealokNYU]

"But how do they do this? Why doesn't someone stop them?"

See, the reason people keep pointing out net points versus gross points is that the studio's accounting for any given movie includes things like the electric bill at the office. New Line might say that the Lord of the Rings grossed a billion, sure, but during that time they had to pay people at the office, pay to keep the lights on in this or that office, pay for the rent for the parking structure (which is owned by New Line in this example). Since the infrastructure costs are infinite and privately held by the company, and the local courts pay obeisance to Hollywood, the cycle continues. All this while studios crow about how much money their movie made-- this is primarily for advertising; everyone ELSE went to see I am Legend, so it must be good, right?-- they turn around and say, "Gee whiz, it's really too bad we didn't see any of that cash. Sure would have been nice!"

The solution, as has been pointed out, is gross points. Joe Q. Director cannot ask for gross points. Joe Q. Director thanks his lucky stars that he is being given the chance to make a movie for more than $10,000 on a maxed out credit card, so he settles for net points because, hey, maybe they won't fuck him. Stephen Spielberg and Tom Cruise get gross points. And their production company funded the whole thing (i.e. bigger stars can ask for bigger chunks because stars are how the studios swear they make money). Peter Jackson, director of over-the-top horror films in New Zealand, is competent enough to execute the Lord of the Rings project, but he is not powerful enough to cover his ass during the negotiation process. I think this is where New Line didn't consider a human element: if the guy is nuts enough to make the Lord of the Ring movies-- 10 years of 24 hour development-- he's nuts enough to follow your ass all the way into Hell for his paycheck.

Soo ...

[phoxix]

Basically the MPAA whines about pirates not paying for films, but itself cannot pay the people who create them ?

I'm shocked! Shocked!

We all know that Hollywood Accounting is a complete scam.

Re:Soo ...

[hobbitFeet]

I suspect you'll find that no-one at the Tolkien Trust created "The Lord of the Rings". Although I don't approve of the studio's alleged wrongdoing with regards payment, I think it is a bit of a joke how long ownership on these things lasts. (Life + 70 years comes to mind, but that is probably wrong).

Re:Soo ...

[hansamurai]

That's a very good point, and I agree with you. But I would bet Christopher Tolkien has had some hand in the Tolkien Trust and he has done quite a bit of work on the Lord of the Rings Universe, whether you agree that's good or bad.

But I can't believe that New Line is trying to say that they made less than one million dollars on the movies though. That's got to be worst than Cutthroat Island.

Re:Soo ...

[PopeRatzo]

Copyright is supposed to encourage authors/composers/etc. to create new works to enrich society. Tolkien isn't even enriching the ground he's buried in anymore, so there's *zero* need for a copyright to continue to exist on his works.

Thank you, NormalVisual. I was wondering when someone would state the obvious.

Since I'm someone who makes a living off his "intellectual property", I've thought about this a lot. I just can't see any benefit (as far as the original purpose of copyright is concerned) for any rights to a work of art to be transferable in any manner. I might go so far as to say an artist should be able to "license" his idea to someone else who wants to extend the work somehow, but there's no reason his grandchildren should be able to reap direct benefits from it.

If I get rich off my work (probability: imperceptible), I'll leave the dough to my wife and daughter (who both happen to be younger and healthier than me, and thus likely to survive me). I feel the same way about patent. If an inventor wants to monetize his invention, he should either develop it himself or license it to a company to develop. When he dies, it should become public domain.

And don't tell me this will "hinder innovation". Innovators innovate. It's what they do.

Re:Soo ...

[ivan256]

Life + (X number of years) is a good way to keep people from getting killed for access to their highly profitable creation though... 70 years is probably too long, but I think 15 years is reasonable.

Of course I personally favor the "infinite copyright period with frequent renewals and exponentially increasing fees" model. I doubt we'll ever see that though.

Re:Soo ...

[canajin56]

You can't believe it? Every movie ever made in the past 100 years has lost money. The studios ate like 100M in pure loss on Spiderman, after all. That's why they couldn't pay Marvel or Stan Lee anything, they agreed to net points and the movie was sheer loss. Dunno how they raised funds for Spiderman II and III when the first one lost so much money and they had to beg the government for a bailout package (which they received). It's standard practice and they all do it. You leave your own salary blank in the accounting books. A few weeks after launch, you know more or less how much the movie made and will make. So you just put a larger number than that into your salary. Boom, finish up the books, your film lost money. Now you can't pay all the people who agreed to a split of the profits. The best part is now California and the Feds pay you millions of dollars to bail you out! AND since you lost money, you can write the loss off on your taxes. So not happy with accounting fraud and contract fraud, they also commit tax fraud and defraud government programs. But some of the money they steal goes to bribe...oops I mean lobby politicians, and mysteriously their criminal actions are never investigated.

Come on, the studios are right

[Aaron Isotton]

Everybody loves bashing RIAA, MPAA and the big bad studios, but come on: The Lord of the Rings was originally published in *1955* (more than 50 years ago). Tolkien died in 1973 (more than 35 years ago). The publishers really had enough time to make money; it should be public domain by now. Yes, I know copyright usually expires 50/70 years after the author's death, but these laws really need updating.

Re:Come on, the studios are right

[Kreigaffe]

You know, you might have a point if the movies were made this year. That would be more than 50 years after they were created, and I could maybe see a point there.

Unfortunately for you the trilogy was released in 2001/2/3, and filming began in October of '99.

That's pretty far short of 50 years after the work was created, and only 26 years after the death of Tolkien himself.

Oh -- and according to Wikipedia the gross revenue of the films was $871,368,364... 7.5% of that is a hair over $6.5 million. Which means NewLine payed them less than 1% of what they were actually owed. Which, whether you think the copyright law is proper or not, when there's a contractual agreement to pay a certain amount for something and you decide "LOL FUCKIT" and actually pay less than 1% of what you said you would, well.. you're probably a giant dick and deserve to be sued for 25 times how much the original agreement was for.

I'm just sad that this means we probably won't see a Hobbit movie.. but I guess we CAN all look forward to The Hibbot?

In a very ironic way

[zuki]

It looks like most of those around adaptations of Tolkien's works are one by one falling prey to the same
sad curse that overtook Gollum...

"My Precious, My Precious!... Must have the Precious!"

If I may say so, I truly wonder what Tolkien himself would think of all this pathetic bickering and bitter lawsuits.

Z.

Re:Standard corporate intimidation

[Pecisk]

It is not standard practice. It is a how companies deal with business.

Are you surprised? But this is what you get when company as entity have nor moral nor serious legal obligations to law. Surprise, it is cornerstone of so called American business thinking.

Re:Ahh, delicious irony...

[NickFortune]

for a property that has made New Line north of $1 billion in revenue...

Quite a bit north, actually. In point of fact, just shy of three billion dollars. And that's not considering merchandising tie-ins, DVD sales, and all the rest of the "film related" revenue.

So I guess we now know the answer to "what has it got in its pocketses?" A shitload of other people's money!

Well, answer this

[tkrotchko]

I agree that 50 years is too long (or about right).

But what do you think the same studios would say if you took a film made in 1954 and just started distributing it? They'd sue you into oblivion. Further, it was the film studios themselves who pushed for such long copyright terms.

So I don't see they have either the legal or moral standing to complain about this. They should pay their damned bills, frankly.

Re:Wow!

[Random BedHead Ed]

Digg can be a neat site for the sheer volume of articles, but it has some serious and aggravating problems. To give one example: it was refreshing to come here this morning and find only one story about the Anonymous protests of Scientology instead of, oh, say, ten.

The Anonymous group seems to have taken a page from Ron Paul supporters: they've positively Digg-bombed the place, putting multiple (and entirely redundant) stories onto the front page, as if this will somehow raise awareness about the CoS amongst a demographic that is vulnerable to the Church's tactics. But they can't do that on Slashdot because of the editorial control here. Add to this the fact that Digg is no longer news for nerds in the way Slashdot is (sports articles now show up with alarming frequency on Digg), and that the comments on Digg absolutely stink compared with those here (yes, they're even worse than ours).

I enjoy Digg for its constant volume of new articles, but Slashdot's articles are much better presented (yes, even with the "teh" in TFA). If this site posted more frequent stories to compete with Digg's volume I'd have little reason to go to Digg. Volume is about the only advantage they have.

Of course...

[encoderer]

Here's basically how it works..

New Line makes movie, movie costs $100MM to make.

Movie is a moderate hit, Movie makes $150 MM in theaters and tie-ins in the first year.

The $150 MM Profit number gets reported by New Line to your little website.

But, there's more...

The actual studio and sound stages aren't owned by New Line, they're owned by New Line Studios and Sound Stages, Inc.

And they must be compensated. $5 MM.

And, of course, the post-production is done by New Line Post Production, Inc.

Andd they must be compensated. $10 MM.

And then there's the TV advertising. This is done by New Line Trailer Production, Inc.

And they must be compensated. $30 MM.

And we can't forget the costs of booking travel and making the logistical operations. This is done by New Line Logistics

And they must be compensated. $5 MM.

And when it's all said and done...

Damn...

The movie JUST broke even.

Sorry little fella, but New Line made a big investment here, and we just don't have the ability to pay you out of our pockets: As it is we just broke even!

Of course, all those Subsidiaries will be kicking most of that back upstairs, but hey, that's THE BIZ!!!!

Marriage as contract

[Tony]

A couple breaking the promise of marriage, or a parent breaking a promise to their son or daughter is really no different...

Marriage is a tad different, in that the things that are promised ("vowed," which is a word we don't hear often enough without irony) are impossible to promise. You may say you will love, cherish, and respect another until the day you die, but you are not promising something you can, in good faith, honestly *know* you can deliver.

People change. Feelings change. Circumstances change. To promise to love someone forever is not a realistic promise. You can promise to *try*. But you can't promise you *will.* At least, not with any real certainty.

In business (and in promises to kids or spouses about realistic promises), you are promising to deliver something that is within your ability. If you promised something you *can't* deliver, you are a liar. If you renege, you are a cheat (in the case of business).

I do wish there were a code of honor these days, but there isn't. Instead, misinformation, lies, and manipulation are the norm in politics and business. So, why shouldn't it be the norm in our day-to-day lives, as well?

Oh, well. If you do your best to be honorable, I will also do my best to be honorable. If we can get a few hundred thousand to also be honorable, we might be able to change things for the better.

I wouldn't count on it, though.

Re:Marriage as contract

[TriezGamer]

Some of us believe the love is an action, not an emotion. As such, we don't necessarily believe such things are impossible to achieve.