Lord of the Rings Lawsuit Merchandising

A federal judge is refusing to disqualify Greenberg Glusker as the law firm representing the estate of “The Lord of the Rings” creator J.R.R. Tolkien, which is engaged in a legal tangle with Warner Bros. and the Saul Zaentz Co. over merchandising rights to the lucrative franchise.

U.S. District Judge Audrey Collins wrote that Warner Bros. and Zaentz have “not met their burden of showing that disqualification is necessary to preserve the integrity of these proceedings.”

The merchandising rights dispute centers on the Tolkien estate’s claims that Warner Bros. and the Zaentz Co. overstepped merchandising agreements by licensing the lucrative “Lord of the Rings” and “Hobbit” franchise for online games.  The estate, along with Harper Collins Publishers, filed suit in 2012, and contends that a 1969 agreement gives Warner Bros and the Zaentz Co. the rights only to tangible games, not virtual merchandise.

Last month, Warner Bros., represented by Dan Petrocelli of O’Melveny & Myers, filed a motion claiming that Greenberg Glusker had “invaded” attorney-client privilege by hiring former MGM studio lawyers as expert witnesses.

A significant part of the rights case is the interpretation of a 1969 agreement in which rights to the Tolkien properties were granted to United Artists, which later granted them to Warner Bros. and Zaentz.

Warner Bros.’ claim is that Greenberg Glusker attorneys, led by Bonnie Eskenazi, contacted Alan Benjamin and William Bernstein, who represented UA as in-house lawyers at the time, to serve as expert witnesses, offered to represent them for free as “percipient witnesses” and “had direct communications with them.” The motion claims that Greenberg Glusker hired Benjamin as an expert and paid him $10,000.

But Collins noted that Greenberg, while maintaining its communications with the lawyers was “entirely proper,” had decided not to have any further contact with Bernstein and Benjamin. Instead, they hired a separate counsel to handle the depositions, although Bernstein is in failing health and it is doubtful one will be taken, Collins wrote. She also noted that Eskenazi returned a retainer to Benjamin and terminated the arrangement they had with him to serve as an expert witness.

Collins wrote that in making her decision, she considered the Tolkien estate’s right to chosen counsel, Greenberg Glusker’s years of work on the litigation, the length of time that had passed since Bernstein and Benjamin were involved, and the “extremely attenuated relationship” between Warner Bros., the Zaentz Co. and United Artists. UA and MGM had filed a “joinder” to the Warner Bros. motion to disqualify Greenberg Glusker, even though they are not parties in the case.

Collins also denied Warner Bros. and Zaentz’s request for an order of disclosure of Greenberg Glusker’s communications with Benjamin and Bernstein and for a deposition of Eskenazi. She wrote that the discovery is “likely to be costly and fruitless, and will not advance the litigation.”

The Tolkien estate is appealing Collins’ decision last year to let Warner Bros. and the Zaentz Co. proceed with a countersuit, in which they claim that the plaintiffs are repudiating earlier agreements and are in breach of contract.

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