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Feud over 'Watchmen' could prove damaging to producer Larry Gordon

He and his lawyers and their insurers could be on the hook for millions of dollars in the dispute between Warner Bros. and Fox.

January 13, 2009|John Horn

The court fight over "The Watchmen" is costing Warner Bros. and 20th Century Fox hundreds of thousands of dollars in legal fees, but the biggest bill of all could fall to the film's producer, Larry Gordon, his lawyers and their insurers, who could be on the hook for substantially more money.

Court documents in the nearly yearlong dispute over the superhero movie's distribution rights show that Warner Bros., which is poised to lose valuable rights to "Watchmen" after a judge's favorable ruling for Fox, is pursuing Gordon "for all damages Warner Bros. suffers as a result of Fox's claims."

The $130-million budget "Watchmen," adapted from the popular graphic novel of the same name, is anticipated to be one of the biggest movie releases of the spring when it opens March 6. But because of the litigation, Warner Bros. may not be able to collect all of the film's proceeds.

Two people familiar with the dispute said that those Warner Bros. damages could potentially total tens of millions of dollars. Among the possible settlement terms under discussion is a deal in which Fox could end up with as much as 8.5% of "Watchmen's" gross receipts, according to a person familiar with the negotiations. "Watchmen" director Zack Snyder's last film for Warner Bros., 2007's "300," grossed more than $456 million in worldwide ticket sales.

It is unclear whether Gordon has initiated an insurance claim against the law firm that negotiated his "Watchmen" deal with Warner Bros., but Gordon has said in a letter that the same lawyers may have made "a unilateral mistake" as part of an earlier deal involving the film's rights.

Dale Kinsella, Gordon's litigation counsel, declined to comment, as did Warner Bros. Jake Bloom and Tom Hunter, lawyers at the firm that handled Gordon's "Watchmen" negotiations with Fox and Warner Bros., did not return telephone calls and e-mails seeking comment Monday.

Lawyers for the studios appeared in court Monday but did not announce that they had settled the case. Another hearing is scheduled for today.

One of Hollywood's most colorful and cantankerous producers, Gordon helped usher in the modern action movie franchise, with credits on "Die Hard," "48 Hrs." and "Predator." The former Fox studio chief has labored to make a movie based on Alan Moore and Dave Gibbons' groundbreaking "Watchmen" graphic novel for decades.

The film's tortured path to the screen is at the center of the copyright lawsuit between Fox and Warner Bros.

Fox sued Warner Bros. in February, arguing that Fox controlled the film's distribution rights because of two "Watchmen" deals it made with Gordon in 1991 and 1994. The pacts, Fox maintained, obligated any "Watchmen" producer other than Fox, including Gordon, to notify Fox and obtain its rights before making a film.

U.S. District Judge Gary A. Feess said in a Dec. 24 ruling that Gordon never obtained from Fox the "Watchmen" rights he conveyed to Warner Bros. in 2006, additionally finding that Fox actually owns the rights to distribute the film.

The judge's ruling has given Fox considerable leverage in negotiating a settlement. If Fox does not like the settlement terms offered by Warner Bros. it could pursue an order from Feess that would block Warner Bros. from distributing the potential blockbuster as planned.

The judge has postponed hearing testimony on such an order while the studios try to resolve the dispute out of court.

Although Warner Bros. has long insisted that Fox's case was meritless and sought to have the case dismissed, the studio stated in court papers that Gordon or his lawyers may have failed to give Warner Bros. the proper documentation about "Watchmen's" rights in a timely fashion when the production was coming together.

The studio said in a filing Dec. 8 that Warner Bros. "never received the very documents upon which Fox asserts its claims" until a year after the studio believed it had acquired its rights from Gordon. Furthermore, Warner Bros. said, Gordon's attorneys did not alert the studio "that it should contact Fox."

Feess has been unimpressed with Gordon's conduct during the litigation, saying in an unusual and harsh footnote to his Dec. 24 ruling that because Gordon repeatedly invoked attorney-client privilege during a deposition, he was no longer free to offer any additional evidence on the copyright dispute.

In a letter Wednesday to Feess, Gordon tried to correct the judge's thinking, with lawyer Patricia Millett saying that Gordon had suffered "significant public scorn" from the lawsuit. In that letter Gordon complained that the 1994 deal that has governed the case was either the result of "a mutual mistake by both parties [Fox and Gordon], or a unilateral mistake made by his counsel, on which Mr. Gordon relied."

Saying the letter violated court rules, the judge returned it to Millett unread.

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john.horn@latimes.com

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