The Ninth Circuit upheld a district court ruling that Warner Bros. may assert counterclaims against the estate of JRR Tolkien in a lawsuit over the right to make digital products based on Tolkien’s books and the resulting Lord of the Rings and The Hobbit movies.
In 2012, the Tolkien estate and HarperCollins (which publishes Tolkien’s books) filed an $80 million lawsuit claiming that Warner, its New Line subsidiary, and producer Saul Zaentz had infringed the copyright in the books and breached a long-standing licensing contract.
Digital Slot Machines
The plaintiffs claimed that the contract conveyed only the right to create “tangible” merchandise and not an “online slot machine” or other digital exploitations that the estate found offensive.
A 1969 contract granted the right to use the “characters, places, objects and events referred to in The Lord of the Rings and The Hobbit… solely and only upon and in connection with the manufacture, sale and distribution of … any and all articles of tangible personal property, other than novels, paperbacks and other printed published matter…”
(Emphasis in original complaint.)
Warner counter-sued for breach of contract in 2013, claiming that the estate had prevented the studio from exploiting the broad rights granted to it, and that the estate knew about and consented to the ways Warner was using the Tolkien intellectual properties.
The estate then sought to dismiss the counter-suit under California’s anti-SLAPP statute. (SLAPP stands for Strategic Lawsuits against Public Participation and was designed to prevent defendants from suing plaintiffs to punish them for bringing the original suit.)
In 2013, a district court denied the motion and the estate appealed.
Is a short memorandum opinion, the 9th Circuit agreed with the district court that the case was a “routine contract dispute that gave rise to [both] claims and counterclaims . . . [for] affirmative relief” and that the anti-SLAPP statute did not apply.
This case illustrates the importance of being clear about the scope of a copyright license and anticipating that the format in which licensed content can be delivered is certain to change over time. The license at issue was entered into in 1969 – long before the birth of the Internet or even the DVD.
As the Wall Street Journal has noted, it is not uncommon for rights to a copyrighted work to be licensed “throughout the universe … in any form, media or technology now known or hereafter developed.”
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Photo Attribution: “JRR Tolkien signature – from Commons” by J.R.R. Tolkien. Created in vector format by Scewing – Heritage Auction Galleries. Licensed under Public Domain via Wikipedia.