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The Weinsteins sue Warner for breach of contract

On Behalf of | Dec 17, 2013 | Business Litigation |

The movie moguls who originally owned the rights to the fabulously successful Lord of the Rings trilogy and its prequel, “The Hobbit,” are suing the new distributor for funds owed. Ben and Harvey Weinstein, famous to Florida residents for bringing dozens of classic films to the big screen, are suing Warner Brothers for breach of contract, claiming they are owed $75 million for the second and third films in the “Hobbit” trilogy. Warner Brothers is contesting the claim.

According to the Weinsteins, they originally owned the rights to J.R.R. Tolkien’s famous works and sold them to Warner Brothers back in 1998 under the understanding that they would receive 5 percent of the gross receipts brought in by any feature film based on the property. As a result, the Weinsteins were paid $90 million for the Lord of the Rings trilogy and an additional $25 million for the first of the three Hobbit films. However, this is where the problems started.

The contract stipulates the Weinsteins were entitled to be paid for the first motion pictures produced for each property, not on any subsequent remakes or spinoffs. However, the language of the contract is not specific enough to determine how to deal with the fact that The Hobbit, itself a single work of fiction, has been split into three films. Warner Brothers contends that parts two and three of the series qualify as “remakes,” whereas the Weinsteins contend that because the story is based on the source material for which they sold the rights, they are entitled to payment for the entire story, no matter how many films it generates. Warner Brothers is working to keep the case out of court and is pursuing independent arbitration.

Contracts are often full of so-called “legalese” designed to clearly detail the rights and responsibilities of each party under the stipulations of the written agreement. In this case, the relevant portion of the contract is open to interpretation, which means the breach of contract suit could go either way depending on the viewpoint of the independent arbitrator. Florida business owners typically understand that a clearly worded contract can mean the difference between a sealed deal and a potentially lengthy court battle.

Source: insidecounsel.com, Movie moguls sue Warner Brothers for “Hobbit” breach of contract, Zach Warren, Dec. 13, 2013