'Watchmen' Watch: Warner Bros. and producer Larry Gordon will wait to discuss who's to blame for Fox lawsuit

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'Watchmen' Watch: Warner Bros. and producer Larry Gordon will wait to discuss who's to blame for Fox lawsuit

Tue Feb 24, 2009 @ 06:25PM PST

By Matthew Belloni

Watchmenmovie Of all the people watching how “Watchmen” does at the boxoffice, Larry Gordon might have the most complicated feelings.

The veteran producer has an A-list backend deal on Warner Bros.’ R-rated graphic novel adaptation and stands to gain financially if it becomes a hit. But if Warners has its way, Gordon also could be on the hook to the studio for a hefty percentage of the film’s grosses based on his role in the legal debacle that ended with Fox owning a piece of the “Watchmen” property.

For this reason, Gordon and Warners have put off until after the $130 million Zack Snyder epic opens next Friday to resolve their standoff over what amount — if anything — Gordon should reimburse the studio for the cost of settling the litigation.

A clear idea of what Gordon might be liable for won’t emerge until the film has largely played out, which could be a month or two, but if the pic is a mega-grosser it could be tens of millions. 
Fox sued Warners last February, claiming copyright infringement based on agreements the studio had with Gordon in the early 1990s.

The case was a rare public showdown between studios over a potential blockbuster and highlighted the challenge of maintaining a clear chain of title on projects that bounce around in development over many years.

When Judge Gary Feess ruled Dec. 24 that Gordon did not secure proper rights to “Watchmen” from Fox, Warners settled the case rather than face a possible injunction against the film’s release.
The Warners settlement gave Fox a $1.5 million reimbursement for development costs as well as up to 8.5% of the film’s worldwide grosses, although the percentage is lower until the film breaks even.

That could put Gordon in a strange position: The better the film does, the more he could pocket as a profit participant but the more he might have to fork over to make Warners whole. That’s because Warners claims its agreements with Gordon contain an indemnity clause requiring the producer to  reimburse it for unforeseen problems with the picture.

Neither Gordon nor his litigation lawyer Dale Kinsella would comment, but they have maintained in court filings that Gordon is not responsible for the litigation and owes Warners nothing. Reps for Warners also declined to comment, but several sources said the studio plans to aggressively pursue Gordon for the settlement costs. In court papers Warners said Gordon should be liable “for all damages Warner Bros. suffers as a result of Fox’s claims.”

That collection effort will now wait until Warners has a better idea what to ask for.

Complicating matters further is Gordon’s position in the litigation that his own transactional attorneys who negotiated the deals are in part to blame for the mess. Gordon’s litigation lawyers, who are not in the same firm as the transactional attorneys, wrote to Judge Feess that Fox’s lawsuit might be traced to errors in the negotiation process by Fox business affairs execs as well as by Gordon’s own counsel at Jake Bloom’s law firm.

Gordon, who is still repped by the Bloom firm, is now said to be pushing for that firm’s malpractice
insurance carrier to make a contribution to any financial settlement. The Bloom firm declined to comment.

The amount of any settlement likely will depend on how well the film does.

“Watchmen” premiered Monday night in London to mixed reviews, with the critic from tabloid News of the World (which is owned, ironically, by Fox topper Rupert Murdoch) calling the 2 1/2 hour epic “spirit-crushingly disappointing” but several others predicting approval from fans of the Alan Moore-Dave Gibbons graphic novel.       

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The Hollywood Reporter, Esq. blog focuses on how the entertainment and media industries are impacted and influenced by the law. It is edited by Matthew Belloni with contributions from veteran legal reporter Eriq Gardner and others. Before joining The Hollywood Reporter, Belloni was a lawyer at an entertainment litigation firm in Los Angeles. He writes a column for THR devoted to entertainment law. Gardner is a New York-based writer and legal journalist. Send tips or comments to [email protected]

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