'Chipmunks' owners sue Fox, claim HALF of 'Squeakquel' millions

By Eriq Gardner and Matthew Belloni

EXCLUSIVE: The family that owns rights to Alvin and the Chipmunks has sued 20th Century Fox, claiming it is owed "half of all profits" from last year's megahit "The Squeakquel."

In a lawsuit filed in U.S. District Court in Los Angeles, Bagdasarian Prods. and writer Janice Karman claim that Fox took substantial portions of a screenplay prepared for the sequel by Karman, wife of the late creator's son, and has refused to account for "substantial copyrighted contributions" used "without authorization." The suit also alleges that Fox separately has breached an agreement over promotional tie-ins to the Chipmunk characters.

Given the success of the "Chipmunks" movie, damages could run in the tens or even hundreds of millions of dollars.

In a statement given to us, Fox said "the Bagdasarians' claims are completely without merit. We look forward to resolving our differences and, in the meantime, we are continuing to move forward with this franchise.”

Ross Bagdasarian is no stranger to litigation over the Chipmunks. His father Ross (aka David Seville) famously created the franchise in 1958 and, upon his death in 1972, Ross Jr. stepped in as the primary owner of Chipmunk productions. For the past decade, he's been fighting over control of his father's creations, bringing lawsuits against movie studios and record companies.

In 2000, Bagdasarian filed a $105 million lawsuit against Universal Studios, claiming that it failed to adequately license products based on Alvin and his high-pitched singing buddies. Two years later, that case settled, with Universal agreeing to return to Bagdasarian rights to the Chipmunks and all related properties.

The settlement paved the way for a deal with Fox to create a new film. In 2007, the studio released "Alvin & the Chipmunks" to worldwide success, grossing more than $361 million at the boxoffice. Then came "The Squeakquel," which was an even greater phenomenon, beating "Avatar" in early boxoffice returns and eventually enjoying more than $442 million in worldwide gross.

The new lawsuit claims that Karman, though not required to render any writing services on "Squeakquel," wrote a screenplay anyway when Fox asked what the story for the second pic should be. According to the complaint, "Fox offered Karman additional compensation" for her writing work, but she rejected it as insufficient, and the two sides never reached a deal. The studio then allegedly went ahead and hired two writers to "revise" Karman's draft and then brought Karman back on board to revise and polish.

Karman now claims that her screenplay constituted a substantial portion of the final "Squeakquel" script (she lists all the scenes in the film that she believes came from her work). "Karman's provision of her screenplay writings to Fox was conditioned upon the payment of adequate compensation for those writings and her attendant services, which Karman never received," the complaint says.

The plaintiffs demand that the court declare Karman to be a co-owner of the "Squeakquel" script, "thereby entitling her to half of all profits attributable to 'The Squeakquel's' screenplay." They want Fox to account for profits.

In addition, the plaintiffs want damages from Fox for allegedly breaching a "Producer Agreement." The family's deal allegedly entitles it to a $3 million rights purchase payment and 2.5% of first dollar gross on the pic. The plaintiffs now say Fox is claiming the $3 million was an advance against gross rather than a payment in addition to gross.

Also, in an eerie parallel to the Universal case, Bagdasarian and his wife claim that Fox didn't take advantage of the film's huge merchandising opportunity, failing to issue a "style book" for prospective merch licensees and delaying efforts. Bagdasarian says this failure was a breach of its deal.

The lawsuit, which claims causes of action for copyright infringement, unjust enrichment, breach of contract and "declaration of co-ownership and accounting for profits," was filed Wednesday by Steve Marenberg and Carter Batsell at L.A.'s Irell & Manella.