Tolkien Trust sues New Line

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Just when two new movie versions of "The Hobbit" seemed on track, another legal roadblock has been thrown in their path.

On Monday, J.R.R. Tolkien's estate -- a British charity called the Tolkien Trust -- filed suit in Los Angeles Superior Court against New Line seeking a court order terminating any rights the studio has to any of the author's works, including "Hobbit."

The Tolkien Trust and the author's original publisher, HarperCollins, claim that New Line has committed "accounting chicanery" by, among other things, inflating the cost of each film in the "Lord of the Rings" trilogy by more than $100 million and refusing to allow an audit of the second and third films in the "Rings" series.

The plaintiffs allege that New Line and Peter Jackson's Katja Motion Picture Group owe them at least $150 million in gross profits from the billion-dollar "Rings" trilogy, which has grossed $6 billion worldwide, a figure that encompasses both boxoffice and DVD sales, according to the complaint.

New Line declined to comment on the allegations.

As a result, the plaintiffs claim that New Line has breached the original 1969 agreement assigning rights to make films based on Tolkien's literary works to United Artists. Although the agreement has passed hands over the years -- from United Artists to Saul Zaentz to Miramax and then New Line -- it remained unchanged.

Late last year, New Line reached an agreement with MGM to co-produce and co-finance two films adapted from the "Hobbit" book, with New Line handling North American rights and MGM handling overseas distribution. Jackson, after reaching his own settlement with New Line over a profit dispute, is to executive produce the movies with his partner Fran Walsh.

The first of the two films, set for a 2010 release, is to go into production next year.

The latest flap in New Line's on-going "Rings" saga comes as the studio, headed by Bob Shaye and Michael Lynne, has come under the scrutiny of parent company Time Warner. The entertainment conglomerate is looking at ways to cut back costs at New Line, which could lead to some or all of the studio's functions being taken over by Warner Bros.

According to the new lawsuit, New Line denies the plaintiffs have any right to terminate the rights, so they seek the court's input on the controversy. Although New Line could go forward with "Hobbit" projects, it faces the risk of losing the rights later if the court rules in the plaintiffs' favor.

"This case presents an extraordinary example of how enormous financial success can breed unabashed and insatiable greed," the lawsuit states. "Despite the nearly $6 billion in gross revenues, New Line has crafted a fantasy tale of its own, making the stunning assertion that it has not received sufficient money to pay plaintiffs a dime."

The case is the latest against New Line over "Rings" profits. Jackson first filed suit against the studio in a contentious court battle that resulted in the December settlement. The Saul Zaentz Co. filed his second suit late last year also alleging New Line's failure to pay profits. In 2004, Zaentz had filed a previous suit over moneys he said were owed him; that was settled in 2005.

Jackson's settlement paved the way for back-to-back films based on "Hobbit." Although his schedule made it impossible for him to direct, Jackson agreed to exec produce the pair of films, with approval over creative elements, including the script. Guillermo del Toro is in talks to helm.
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