Tolkien's estate battles over 'Hobbit' rights

A sign seen at The Village Green on Oct. 25, 2010 in Queenstown, N.Z. The Tolkien estate is suing over intangible merchandise associated with "The Hobbit" movie.

The release of "The Hobbit," the latest Peter Jackson movie, is just weeks away. The film is based on the book by J.R.R. Tolkien, which was published in 1937. Seventy-five years later, the descendents of Tolkien are suing Warner Brothers for copyright infringement.

The issue is not over merchandise, like Bilbo Baggins action figures, iPhone covers and mouse pads, all of which are covered under Warner Brothers copyright licensing agreement. What's at issue in this $80 million lawsuit are the intangibles like "The Hobbit" ringtones. You can't touch them -- which means Warner Brothers doesn't have the right to sell them.

Oren Bracha teaches intellectual property law at the University of Texas. He says the question of what's tangible and what exactly copyright owners have rights to, "has been haunting copyright law since it was created 300 years ago."

The lawsuit started after the Tolkien estate's law firm discovered a "Lord of the Rings" online slot machine in a spam email. But it's not just digital media. The Tolkien estate says restaurants do not have the right to use "The Hobbit" -- which could be trouble for Denny's, who offers a Hobbit menu with items like a "Build Your Own Hobbit Slam" and the "Hobbit Hole Breakfast."

So, is the Gandalf Gobble Melt tangible or intangible? According to David Nolte, an accountant who's worked on similar entertainment cases, it all depends on the wording of the contract.

"A studio ideally would list not just products that exist now but would make it clear that the license is for all future products including products that have not yet been invented," he says.

Products like online slot machines, and ringtone which have indeed been invented since the copyright agreement was signed in 1969.

About the author

David Weinberg is a general assignment reporter at Marketplace.

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