New Line Cinema, the owners of the Lord of the Rings movies ended a potentially crippling and definitely embarrassing lawsuit situation today when it reached a settlement with HarperCollins Publishers Ltd and the trustees of the JRR Tolkien Estate over claims the two groups did not receive their entitled share of proceeds from the movies. With the lawsuit concluded New Line can go ahead with plans for a two-movie adaptation of The Hobbit, to be directed by Guillermo del Toro by produced by Peter Jackson with Fran Walsh.
The LA Times describes the lawsuit:
The lawsuit, which alleged breach of contract and fraud, claimed the heirs had not received any money under a pre-existing licensing agreement that guaranteed them 7.5% of the films' gross receipts (money that movie distributors receive after theaters keep their share of ticket sales). The rights to Tolkien's work, originally sold to United Artists in 1969, ultimately ended up with New Line. The lawsuit, which sought to terminate New Line's rights to all of Tolkien's works including "Hobbit" until the claims were resolved, was settled in the nick of time. Not only were the plaintiffs scheduled to go to trial Oct. 19, but the two "Hobbit" movies are slated to go into production next year with director Guillermo del Toro and producer Peter Jackson.
The amount of the settlement was not disclosed. Much of it will go to charity via the Tolkien’s Tolkien Trust.