New Line Cinema has been sued by the estate of author J.R.R. Tolkien for $150 million over the proceeds of the Lord of the Rings movies, charging the studio with using "creative accounting" to avoid paying it a share of proceeds from the hit films.
Trustees of the Tolkien Trust, along with the British arm of HarperCollins Publishers and a private family trust of Tolkien heirs, sued New Line, a unit of Time Warner, in a complaint filed in Los Angeles Superior Court. They claim they have received only an upfront fee of $62,500 for their rights to the films, which are estimated to have grossed $6 billion.
The trustees and the publisher say they are owed a 7.5 percent share of the receipts under an agreement signed in 1969 with United Artists for the film rights to The Hobbit and The Lord of the Rings trilogy. New Line inherited those rights in 1998 from movie mogul Saul Zaentz, who has also sued the company. He licensed his rights to Miramax, which passed them to New Line.
Director Peter Jackson recently settled his own lawsuit with New Line over the accounting for the Rings trilogy and has signed on to produce two movies based on The Hobbit. However, the latest lawsuit threatens to derail production on The Hobbit films, which had been slated for release in 2010 and 2011.
