New Line and Peter Jackson Settle 'Rings' Litigation

Posted by Eriq Gardner

Lots of successful films become well-litigated films. Then there's "Lord of the Rings." The trilogy garnered nearly $3 billion in theaters and almost as many lawsuits over New Line's accounting. Just last week, for instance, The Saul Zaentz Co., which bought film rights for the Tolkein trilogy and licensed them to Miramax (which sublicensed them to New Line) sued New Line for the second time, demanding to see its books.

But at least one case seems to have been put to bed — and this one may be the most important for New Line. The company today announced a deal with director Peter Jackson over the filmmaker's profit participation on "Rings." The deal clears the way for Jackson to executive produce (but not write or direct, apparently) two films based on Tolkein's other book, "The Hobbit," for New Line and MGM to jointly distribute.

Considering the nastiness of the litigation, this is a remarkable development. The two sides have fought bitterly for years. In September, Jackson won a key discovery ruling, entitling him to documents based on the audit provisions of his contract. He also got $125,000 in sanctions against New Line, an embarassment for the studio and its lawyers at the O'Melveny & Myers firm. That ruling may have given Jackson and his litigation team at Irell & Manella some leverage to pursue the deal announced today.

Regardless, a settlement is a big accomplishment for both sides. Jackson, his longtime manager Ken Kamins and lawyer Peter Nelson, had dug in for a long fight. And Jackson's suit was based on only the first "Rings" film, so any settlement presumably covered any future claims on the other films (it's hard to believe New Line would leave itself open to another Jackson lawsuit...or two).

Jackson better get started on "The Hobbit" quickly. In 2006, Saul Zaentz  pointed out that film rights to the book will revert back to his holding company in 2009. That same year, Zaentz told the New York Times that he wanted Jackson to direct "The Hobbit." Perhaps Jackson's deal with New Line will satisfy Zaentz, but then again, was the timing of Zaentz' lawsuit last week and Jackson's deal this week merely a coincidence?

UPDATED: Media outlets are saying the "Rings" settlement only includes the first film, meaning Jackson is free to audit and sue over profits from the other two "LOTR" blockbusters. That seems like New Line is just asking for trouble, but maybe the studio wanted to move forward so badly they agreed to leave it open.