Tue Aug 19, 2008 — by Glenn Hauman

Fox sues to block Watchmen movie from opening

Who's Watching The Watchmen Movie?

Uh-oh. Nikki Finke broke the news last night that a federal judge has denied a Warner Bros. motion to dismiss 20th Century Fox's legal battle over the rights to develop, produce and distribute a film based on Watchmen. Fox was seeking to enjoin Warner Bros from going forward with the project, and U.S. District Court Judge Gary Allen Feess on Friday refused to dismiss the lawsuit filed by Fox on February 12th, 2008.

Fox had the rights to Watchmen back in the late 80's-- I have a copy of the first draft of the script by Sam Hamm (writer of the Tim Burton Batman) dated September 9, 1988. Here's Finke's chronology of what's happened since:

1986-90: Fox acquires motion picture rights in The Watchmen.
1990: Fox enters into a domestic distribution agreement with Largo Entertainment, a joint venture of JVC Entertainment Inc., Golar (Larry Gordon), and BOH, Inc. The “Largo Agreement” established Fox’s domestic distribution rights, through a license from Largo, in “subject pictures” as defined in the agreement.
June 1991: Fox enters into a “Quitclaim Agreement” with Largo International, through which Fox “quitclaims to Purchaser all of Fox’s right, title and interest in and to the Motion Picture project presently entitled Watchmen, which included specifically described literary materials. Notably, the agreement provides that, “if Purchaser elects to proceed to production, the Picture shall be produced by Purchaser and shall be distributed by Fox as a Subject Picture pursuant to the terms of the Largo Agreement ...” In consideration for the rights to Watchmen, Fox was to be reimbursed for its development costs ($435,600) plus interest plus a profit participation in the worldwide net proceeds of any Watchmen picture.
Nov. 1991: The Largo Agreement was amended; Watchmen was listed as a project quitclaimed to Largo.
Nov. 1993: Larry Gordon, through Golar, withdraws from the Largo Entertainment joint venture; Largo conveys any rights it has in Watchmen to Gordon/Golar. Based on the 1991 quitclaim, the Court may infer that Gordon now stood in the shoes of Largo with respect to Watchmen and held whatever rights it acquired through the 1991 Quitclaim, which left Fox with the distribution rights it retained through that agreement.
1994: Fox negotiated a “Settlement and Release” agreement with Gordon which contemplated that the Watchmen project would be put in “perpetual turnaround” to Lawrence Gordon Productions, Inc. The “turnaround notice” gave Lawrence Gordon Productions “the perpetual right . . . to acquire all of the right, title and interest of Fox [Watchmen] pursuant to the terms and conditions herein provided.” The turnaround notice then described the formula for determining the buy-out price in the event that Gordon elected to acquire Fox’s interest. Thus, the document suggests that Gordon acquired an option to acquire Fox’s interest in Watchmen for a price. In fact, the notice obligated Gordon to pay the buy-out price on the commencement of any production of a Watchmen film. The notice also provided that the agreement was personal to Gordon and that, “prior to payment of the Buy-Out Price,” he could not assign rights or authorize any person to take any action with respect to the project.
May 2006: Warner Brothers, allegedly with knowledge of the 1991 Quitclaim, entered into a quitclaim agreement with Gordon under which it claims to have acquired the rights to the Watchmen project. Fox alleges that these facts demonstrate that, at the very least, it retained distribution rights in Watchmen, that it performed all of its obligations under the relevant agreements, and that while it granted Gordon what amounted to an option to acquire its rights, neither Gordon nor his successors ever fulfilled their contractual obligations to Fox. Indeed, Fox contends that Warner Bros either knew or turned a blind eye to the fact that Fox had retained distribution rights in the project, and that Gordon had not perfected his interest in the Watchmen project before quitclaiming it to Warner Brothers. In any event, Fox now contends that it presently holds rights in Watchmen and that Warner Brothers’ production of the Watchmen film infringes on those rights.

The really bad news, according to Variety, is that Fox has no interest in settling and would rather kill the movie outright. Quote: "When you have copyright infringement, there are some damages you never recover," said a source close to the litigation. (No one's asked Alan Moore about copyright violation here, strangely, either here or with Fox's League of Extraordinary Gentlemen.) This makes great sense to Fox, who spent more than $1 million developing Watchmen and can now force competitors Warner Bros and Paramount to eat tens of millions in sunken costs of making the movie and cripple their spring.

Blog@Newsarama points to all the legal documents: the Fox complaint, Warner Brothers’ response, the disputed legal documents and the judge’s order.

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