Warner Bros. Sued for Allegedly Distributing Movies Without License

A German company previously had a deal with Franchise Films, which made a deal with Warner Bros. Franchise exited the picture, and now the Germans are targeting Warners over three films.

The saga of Franchise Pictures, one of the biggest Hollywood blow-ups of all time, isn't quite over.

On Tuesday, Warner Bros. was sued in California federal court for allegedly distributing three films -- The Whole Ten Yards, The In-Laws and Ballistic: Ecks vs. Sever -- without a proper license. The claims come from a German production company that owns the copyright on the films and licensed Franchise to distribute them before that company went bankrupt. Oh, and there's a David Bergstein element here too.

According to the lawsuit filed by MHF Zweite Academy Film GMBH, the company granted Franchise the rights to distribute five films in 2001-02 in return for a minimum guaranty and certain earmarked gross receipts from exploitation of the films.

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In turn, Franchise is said to have entered into subdistribution agreements with Warner Bros. and its various divisions.

Franchise filed for Chapter 11 bankruptcy protection in 2004, and during that process, Bergstein acquired certain of Franchise's rights, title and interest to the films. This allegedly happened without the consent of MHF, and the distribution agreements on Ecks vs. Sever, In-Laws and Whole Ten Yards were rejected, which MHF says retroactively terminated any rights Franchise had to distribute and exploit the films.

Later, MHF says it made a limited assignment of rights to films to Bergstein, the embattled film executive whose companies later also declared bankruptcy. MHF says it hasn't received any gross receipts on those deals.

Meanwhile, MHF asserts that Warners has been distributing its films without a valid license. The plaintiff is suing for copyright infringement, unjust enrichment and breach of contract. The latter claim comes becomes MHF says that not only have the films been distributed without license but it is owed money on the films.

MHF, represented by Matthew Heyn at Klee Tuchin, is seeking actual and compensatory damages.

Warner Bros. gave us this statement:

"MHF’s lawsuit comes years too late. At its core, the lawsuit complains about a transfer of rights in three motion pictures that occurred in 2006 during the Franchise Pictures bankruptcy. MHF had notice of that transfer at the time, and several opportunities to object, but failed to do so and the bankruptcy court approved the transfer. MHF’s claims are unsupported by both bankruptcy and copyright law and are therefore without basis."

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