Thu Sep 4, 2008 — by Arthur Tebbel

'Watchmen' Lawsuit Explained for You

A Briefing on the Legal Wranglings Between Warner and Fox

In a story that has had more twists and turns than the graphic novel it’s based on, the legal battle over the movie rights to Watchmen is in the final stretch.  Gary Allen Feess, a federal judge, set a trial date of January 6th for the copyright suit between 20th Century Fox and Warner Brothers.  The date is two months before the film’s scheduled release.

The comics readers, wary of anyone attempting to adapt Alan Moore and Dave Gibbons' seminal graphic novel, was set ablaze once they saw the trailer in front of The Dark Knight.  Unfortunately shortly after the trailer was released the fate of the film was almost immediately put in doubt when a federal judge's ruling allowed Fox to seek to block the release.  Fox claims that the film infringes on their rights stemming from their attempt to adapt the acclaimed graphic novel in the early '90s.

They key to this story legally is the concept of "turnaround".  When a studio abandons a property they put it into turnaround, basically saying that another studio can take the property and develop it but they have to compensate the original studio for development costs plus interest. 

Watchmen has had a complicated history from when the rights were first sold to Fox in 1986.  The rights have been with Warners once before, when Joel Silver and Terry Gilliam were attached to produce and direct, respectively.  Universal had the rights for what seem like 15 minutes where they had David Hayter write a draft of the script.  Creator Alan Moore praised this draft saying it was, “as close as I could imagine anyone getting to Watchmen.”  The Hayter draft was the basis for the version that was eventually filmed.  After Universal the project went to Paramount, who dropped the project because of budget issues as management changed from Sherry Lansing to Brad Grey.  Paramount has received the international distribution rights in exchange for their turnaround rights.

The issue of contention comes from an agreement between Fox and producer Lawrence Gordon.  Gordon has been attached to the project since it’s inception and when his company, Largo International, dissolved he purchased the rights from Fox and moved it around until the film found it’s final home with Warner, parent company toi DC Comics which published the maxiseries in the first place.  Fox contends that their deal with Gordon required him to resubmit the film to Fox every time there was a changed element.  In this context "element" can mean anything from a new subplot to a new starring actor.  Fox says that Gordon’s failure to do this when the project moved to Warner and acquired director Zack Snyder means that they retain some of the rights to make this film. 

Fox said they spent in excess of $1 million in developing the film before giving up and Gordon has said he has paid nearly $400,000 to Fox to settle that debt.

Warner contends that they have settled all the rights issues through their settlement with Paramount, the previous rights holder.  They dispute that Fox has any claim on the property at all. Two weeks ago they moved to have the case dismissed but Judge Feess refused. In setting the trial date, Feess indicated the case was far too complex for an interim judgement and directed both studios to expedite the discovery process.

Last Friday, Warners informed the court of how they envisioned their defense, bringing Universal into the case. According to report in The New York Times, "In Warner’s version of events, Mr. Gordon, who is not named as a defendant in the Fox suit, actually offered the project to Fox in 2005, shortly before bringing it to Warner after years of trying to make the movie with Paramount. 'Fox simply rejected it,' Warner said in the Friday filing.

"On Friday Warner said Fox had gone so far as to grant it rights to the title Watchmen, which Fox had earlier registered with the Motion Picture Association of America.

"Fox, moreover, was paid $320,000 by one of Mr. Gordon’s companies for rights to Watchmen as early as 1991, Warner lawyers said in the report. Fox has said that agreement was superseded by a later deal, under which Mr. Gordon was supposed to deliver a much larger buyout price that has never been paid."

Fox made no claims on its rights through all of the development of the film until February of this year when it filed suit, when Warner’s version was well into production.  Fox has used these tactics before with Warner, waiting until the film adaptation for The Dukes of Hazzard was ready for release before seeking an injunction.  In that case Warner paid a settlement of $17.5 million to settle with Fox.
 

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