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Tolkien Trust Sues New Line, May Kill "Hobbit" 450

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."
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Tolkien Trust Sues New Line, May Kill "Hobbit"

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  • by Lumpy ( 12016 ) on Tuesday February 12, 2008 @09:10AM (#22390812) Homepage
    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.

    • by jmv ( 93421 ) on Tuesday February 12, 2008 @09:13AM (#22390854) Homepage
      The term you're looking for is Hollywood accounting [wikipedia.org].
      • Then they should probably ask for 7.5% of profit, but no less than X megabucks in their contract.
    • by CRCulver ( 715279 ) <crculver@christopherculver.com> on Tuesday February 12, 2008 @09:16AM (#22390876) Homepage

      This is why you see lots of big actors and big name directors and talent working on more and more "indie" films.

      Even so, many films with big-name actors that are called "independent" are nonetheless closely tied to studios. Remember the buzz over Eternal Sunshine of the Spotless Mind [amazon.com] , a fresh new film made by a new group of filmmakers outside the mainstream? Well, it came from Focus Features, which despite calling itself an "art house" studio is in fact owned by Universal.

      One wonders if the accounting on European films is more honest. European film industries are heavily subsidized by the state, and when you have to report back to the state on what you've done with their funding, perhaps there is less temptation to cook the books.

    • by emj ( 15659 )
      Considering Peter Jacksons lawsuit against New Line [wikipedia.org] I'm inclined to believe in you. I'm not sure what an indie film is now days, what wins at Sundance (swedish) [pingpongkingen.se] is really just good pictures not made by Hollywood.

    • by msauve ( 701917 ) on Tuesday February 12, 2008 @10:04AM (#22391396)
      shouldn't the MPAA be thanking filesharers, since they're diluting their losses? (just using Hollywood accounting logic here)
      • Re: (Score:3, Insightful)

        by Rogerborg ( 306625 )
        Ooh, I'd love to see that one argued in court. Unfortunately, since studios stopped paying their employees and started buying politicians, you damages aren't actual, they're statutory and punitive.
    • Re: (Score:3, Insightful)

      by mapkinase ( 958129 )
      I do not know about all actors, but actors get fixed salaries (20M per film) AND (sometimes) that percentage. That makes it really good incentive to do Hollywood.

      Big actors do small films mostly because they want to do a favor to somebody, support a cause, or something else immaterial.

      Once small actors get known for their indie films, they inevitably start looking for big roles to cash their indie fame.

      Everybody wants cash: Holliwood-bolliwood, actors, indies-shmindies. It's a business.
    • by Rogerborg ( 306625 ) on Tuesday February 12, 2008 @10:43AM (#22391900) Homepage

      If your name doesn't come before the title, then you're never, ever getting a sniff of the gross. Even headline producers, writers and directors often can't demand that, and end up with less than the guy working the clapboard for union salary.

      One of the most egregious cases is creator/producer/writer J. Michael Straczynski getting boned over Babylon 5 [google.com]. He was in for a share of the net, and Warner Brothers demonstrated by their actions that the show was making a net profit every season (or else it would have been shitcanned). However, the final figure, after all production expenses had long since ceased, and all the money from merchandise and DVD sales (half a billion gross!) was in worked out to a claimed $80 million loss. Riddle me that.

    • by TopShelf ( 92521 ) on Tuesday February 12, 2008 @11:01AM (#22392108) Homepage Journal
      But the article says this deal was for 7.5% of gross receipts, not profits, which reduces the opportunity for creative accounting.

      But you're right, studios are scumbags.
      • by AKAImBatman ( 238306 ) <{akaimbatman} {at} {gmail.com}> on Tuesday February 12, 2008 @12:47PM (#22393516) Homepage Journal

        which reduces the opportunity for creative accounting.

        That's what you think. By selling the distribution rights to a subsidiary below cost, New Line was able to show a loss on the movie while their subsidiary was showing gangbuster profits. Since the contract was with New Line rather than the subsidiary, the result is that they didn't have to pay out any royalties.

        So sorry. Maybe the next film will do better? Just sign here on the dotted line and we promise cross our hearts that the next film will show a profit. Really.

        I almost guarantee that the judge will take New Line to the cleaners for such accounting. It won't change anything, though, as the studios count on it being too costly to go through a court battle to recover the money you're owed. An occasional loss in court still brings them out ahead.
    • by sorak ( 246725 ) on Tuesday February 12, 2008 @11:06AM (#22392152)
      So, is the accounting the only creative thing coming out of Hollywood these days?
  • Soo ... (Score:4, Insightful)

    by phoxix ( 161744 ) on Tuesday February 12, 2008 @09:12AM (#22390840)
    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 [wikipedia.org] is a complete scam.

    • Re:Soo ... (Score:5, Insightful)

      by hobbitFeet ( 1127615 ) on Tuesday February 12, 2008 @09:22AM (#22390918)
      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 ... (Score:5, Insightful)

        by hansamurai ( 907719 ) <hansamurai@gmail.com> on Tuesday February 12, 2008 @09:47AM (#22391158) Homepage Journal
        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 ... (Score:4, Insightful)

          by canajin56 ( 660655 ) on Tuesday February 12, 2008 @12:12PM (#22393042)
          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.
      • Re:Soo ... (Score:5, Interesting)

        by NormalVisual ( 565491 ) on Tuesday February 12, 2008 @09:52AM (#22391218)
        I'm with you 100% there. 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. Copyright is only providing an income stream for his heirs (and New Line) at the expense of society now.

        I think that New Line is scummy for their shady accounting practices, but they really should not have had to negotiate for the film rights to begin with.
        • Re:Soo ... (Score:5, Insightful)

          by PopeRatzo ( 965947 ) * on Tuesday February 12, 2008 @10:35AM (#22391802) Journal

          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 ... (Score:4, Insightful)

            by ivan256 ( 17499 ) on Tuesday February 12, 2008 @11:19AM (#22392314)
            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.
  • by dj42 ( 765300 ) on Tuesday February 12, 2008 @09:12AM (#22390844) Journal
    My subject is a quote from TFA.

    Let's break this down.

    "The Lord of teh Ring's trilogy"

    You know what, I'm not even going to bother. What kind of retard submitted this?
  • ...Major entertainment companies have long been of the opinion that the artists who create the products they sell are expendable and interchangable... THis is how a studio executive could sleep at night after giving the Tolkien estate less than $63,000 compensation for a property that has made New Line north of $1 billion in revenue...

    Glad to hear it--they're getting what they deserver.
    • by erroneus ( 253617 ) on Tuesday February 12, 2008 @09:34AM (#22391050) Homepage
      They haven't won their suit yet. The studios haven't yet gotten what they deserve. But I'm with you -- I hope they lose BIG. The judge should award triple damages.
    • by NickFortune ( 613926 ) on Tuesday February 12, 2008 @09:51AM (#22391206) Homepage Journal

      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 [the-numbers.com] 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!

    • Re: (Score:3, Interesting)

      Major entertainment companies have long been of the opinion that the artists who create the products they sell are expendable and interchangable

      While the artist that created the product New Line is selling was neither expendable nor interchangeable, after almost 35 years he is still irrevocably dead, and as such is quite unlikely to be writing anything more in the near future anyway. New Line should be getting raked firmly over the coals for attempting to weasel out of performing on a contract, but if
  • by jimicus ( 737525 ) on Tuesday February 12, 2008 @09:21AM (#22390914)
    Provided you happen to be an accountant who works in a movie studio.

    Has anyone ever figured out the arithmetic to find out how much profit a given studio is making on the assumption that the takings they quote to people who should be getting X% of the total are accurate? I am pretty sure it would demonstrate a massive loss year-on-year.
  • by Aaron Isotton ( 958761 ) on Tuesday February 12, 2008 @09:22AM (#22390920)
    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.
    • The Lord of the Rings was originally published in *1955* (more than 50 years ago)

      Isn't the edition with the appendices somewhat more recent, though? Though certainly your point stands.

    • Re: (Score:2, Insightful)

      Rest assured that these laws *will* be updated when some really valuable copyrights come close to expiring.
    • I agree with you, but it is ironic that the same group of people running around suing college students and claiming that illegal copying is depriving directors and scriptwriters of their paychecks is refusing to honor the very same copyright laws. Funnier still is that the movie studios lobbied to have the length of copyright extended!
    • Well, answer this (Score:5, Insightful)

      by tkrotchko ( 124118 ) * on Tuesday February 12, 2008 @09:56AM (#22391268) Homepage
      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.
    • by kellyb9 ( 954229 )
      While I think "come on" is a fantastic legal argument, your point is somewhat moot. It doesn't matter what the law should be, it only matters what it is. I have to concur with a similar comment that essentially says the studio should "pay it's damn bills".

      As an aside, with how much those movies grossed, I really believe the people who have legal rights deserve a hell of a lot more than 67,000. But in their own right, I'm sure they saw an increase in royality fees on book sales.
    • by dido ( 9125 )

      True, but the studios themselves also believe that copyright ought to last forever. Only if it's their copyright. If copyright law doesn't suit them, then they will do whatever they can to get away with not paying for the license, including such dirty tricks as this. And they have the gall to complain about piracy when they are no better than pirates themselves. What utter hypocrisy.

    • by Kreigaffe ( 765218 ) on Tuesday February 12, 2008 @10:14AM (#22391502)
      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?
    • He's actually been dead a little less than 35 years (September of this year will be 35), but otherwise the rest of your point is spot-on. He's not contributing any more to society and can't possibly benefit from any earnings, so there's no reason to let the copyright continue.
  • 1- Sign a contract promising a percentage of the gross 2- Pay a small advance to get the job done 3- Once the job is done, don't pay one more cent, and laugh all the way to the bank. 4- Most contractants don't know a decent lawyer or can't afford them, or won't bother to sue -- too much worry. 5- Profit.
    • Re: (Score:3, Interesting)

      by o'reor ( 581921 )

      Yeah I know, formatting is for wussies! There I go again:

      1. Sign a contract promising a percentage of the gross
      2. Pay a small advance to get the job done
      3. Once the job is done, don't pay one more cent, and laugh all the way to the bank.
      4. Most contractants don't know a decent lawyer or can't afford them, or won't bother to sue -- too much worry.
      5. Profit.

      What's depressing is that this is becoming more and more a standard practice, as the courts do not demand enough punitive damage to seriously discourage such bull

      • by Pecisk ( 688001 ) on Tuesday February 12, 2008 @09:46AM (#22391144)
        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: (Score:2, Insightful)

        by poena.dare ( 306891 )
        "I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. . . . corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."

        -- Abraham Lincoln, Nov. 21, 1864
  • MPAA HIppocrits (Score:2, Interesting)

    by Junkyboy55 ( 1183037 )
    The MPAA and their lovers in bed the RIAA have been gong after people for downloading movies and music and everything in between in hopes that people will buy more CDs or specifically more songs ( Wired [wired.com] says record companies make more money off songs than CDs>) even to the extent of saying it is illegal to rip CD you bought and put it on your computer and than again to place those same purchased songs on your iPod or MP3 player.

    This is pathetic. Those hippocrits are still making tons of money due to th
  • by zuki ( 845560 ) on Tuesday February 12, 2008 @09:30AM (#22391004) Journal
    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.

  • nice (Score:2, Interesting)

    by Anonymous Coward
    When I lived in Wales I shared a student house with a girl called Freya who is a close descendant of Tolkien. I have to say the family is a very nice family and they certainly should get alot more than they are currently getting for the rights. Then again, why should they make money for someone elses work that they didn't make themselves? It's a tough call, but I'm biased so I think they should get the money (and give some to me lol) :-)
    • Re: (Score:3, Insightful)

      by jcr ( 53032 )
      . Then again, why should they make money for someone elses work that they didn't make themselves?

      Because the author chose to give it to them.

    • Re: (Score:3, Informative)

      Well, Christopher Tolkien, as JRRT's literary heir, has done a substantial amount of work, and has basically dedicated his retirement years almost solely to bringing the vast body of his father's works into print. The History of Middle Earth series is basically an in-depth literary archaeological dig, demonstrating the origins of Tolkien's mythos and its evolution from approximately 1917 when JRRT began work on The Book of Lost Tales (the earliest version of the Silmarillion) right through to the final wri
  • It's for reasons just like this that when you want to get actually paid what you're owed you make certain that the contract stipulates you get a percentage of "all gross revenues, without regard to source." The accountants can't fudge those numbers, and you get paid what you are rightfully owed. With crap like this going on -- where no movie ever makes a profit -- is it any waonder that the companies are seen as such scum?
  • You would think the Tolkien estate would be able to afford laywers up-front to advise them on the stupidity of that contract.

  • by i.r.id10t ( 595143 ) on Tuesday February 12, 2008 @09:45AM (#22391132)
    Anyone else remember Dragon magazine and the spoof on getting sued by the Tolkien estate - they weren't allowed to say "ring".

    "Someone get the phone, its circular metal banding off the hook!"

  • Nasty!!! (Score:4, Funny)

    by seanmeister ( 156224 ) on Tuesday February 12, 2008 @09:52AM (#22391222)
    Nasty Tolkienses! TRICKSY!!!!!!
  • by iknownuttin ( 1099999 ) on Tuesday February 12, 2008 @09:54AM (#22391252)
    this is an example of why there needs to be IP law reform. I'm NOT saying it needs to be eliminated: just reformed. Tolkien, as far as I know, is dead. Why is his IP still owned? Why hasn't his stuff gone into public domain?

    The reason for IP is to give the creators an incentive to create, not for the folks who buy the rights to profit off of them for all eternity.

    • Re: (Score:3, Interesting)

      by Shados ( 741919 )
      Agreed. I'm (one of the few) a full supporter of IP. However, the existing system is such a freagin mess... I want people and companies to be able to make a living from their ideas. NOT from the ideas of others. And making a LIVING means while you're ALIVE...

      One can dream...
  • Without the royalty money, how is author J. R. R. Tolkien going to afford to put food on his table? Why, without the royalty money, he may not even be able to afford to write a new book!

    (I'm not sure who to cheer for here)
  • by DarkSarin ( 651985 ) on Tuesday February 12, 2008 @10:12AM (#22391478) Homepage Journal
    First, as everyone should know: you never, ever sign a contract for royalties on net profit. There will never be ANY net. Period. It is far too easy to make that happen, especially if you are not on equal footing. It doesn't metter what the relationship is, if you are signing a contract where you get royalties for anything, it is always on the gross revenue, never anything else. End of story.

    Second. Studios lie about their revenue. The WGA strikes have shown this, and everyone knows it. Everyone knows that they lie about revenue. Essentially what you shuold be doing when you saying when you sign a contract with the studio is this: I get to choose the highest available estimate of revenue as my basis for what you owe me on royalties. If you put out figures claiming the film has grossed $1.2b at the box, then we go by that figure, unless you have other figures that are higher. You can't claim one figure publicly and then sell me on another, lower, figure in private. On the other hand, those in estate situations like this should be able to to demand open accounting on projects. I know I would. If you sell the movie rights to a book, then you should probably say something like: I need to have access to the accounting procedures for complete independent review.

    Third, I am also ambiguous about copyright length. I strongly maintain that authors, even those doing work for hire, should retain private copyright. Corporations should not own copyrights in the same way that private authors do. Who then would own the story for Pixar's movie 'Toy Story'? I don't know. I think that when a team of individuals are doing a collaborative work, then the corporation can own the copyright for a period of time not greater than 25 years (or some other period of time). This gives the studio sufficient time to reap profit from works, but then allows them to become public domain in an appropriate fashion. Individuals or private teams (say co-authored works) become copyrighted for the life of the author or primary author. After this time, the estate may continue to produce related material and any new material is under copyright of the new author using their life as the benchmark. I think provisions for the immediate descendents garnering automatic royalties for major deritive works would be appropriate, which would be mean that Tolkien's children would get money for the production of anything made related to Middle Earth, but they would have no control over what actually got made. It would then be up to consumers to decide what was worthy of purchase and what was crap. A rare and shocking concept, true, but I think an important one.

  • Off Topic (Score:3, Funny)

    by BillBrasky ( 610875 ) on Tuesday February 12, 2008 @02:14PM (#22394690)
    So, I have this idea for a great movie. It's about two gnomes who find a bracelet of power, and they have to take it to the Burning Steppes and cast it into the Cauldron. They form the Brotherhood of the Bracelet. Along the way they're trailed by a murloc named Gottom, who's obsessed with the bracelet, and nine bracelet bogeymen. It could be a three-parter, called 'Ruler of the Bracelet'. The first part would be called 'The Brotherhood of the Bracelet', followed by 'A Couple of Towers', with the climactic ending called 'Hey, the King's Back!'

Vitamin C deficiency is apauling.