Watchmen: Fox and WB settle, finally

Warners, Fox settle over 'Watchmen'
Under the agreement, Fox will not be co-distributor

By Matthew Belloni and Borys Kit

Jan 15, 2009, 08:25 PM ET

"Watchmen" Geeks can rejoice.

Warner Bros. and Fox have resolved their dispute over "Watchmen," with the studios scheduled to present a settlement to Judge Gary Feess this morning and request that the case be dismissed.

Terms of the agreement were not disclosed, but the deal is said to involve a sizable cash payment to Fox and a percentage of the film's boxoffice grosses; Fox will not be a co-distributor on the film, nor will it co-own the "Watchmen" property, but it will share in revenue derived from it. The studios released a joint statement last night.

"Warner Bros. acknowledges that Fox acted in good faith in bringing its claims, which were asserted prior to the start of principal photography," the statement read. "Fox acknowledges that Warner Bros. acted in good faith defending against those claims."

Fox sued Warners in February, claiming copyright infringement based on agreements the studio had with producer Larry Gordon. Feess ruled Dec. 24 that Gordon did not secure proper rights to "Watchmen" from Fox before shopping the project and setting it up at Warners.

Feess' decision prompted settlement talks to heat up because Warners faced the prospect of an injunction stopping its March 6 release of the $130 million comic book adaptation.

Gordon is not a party to the case, but Warners is said to be after the producer and his attorneys to reimburse the studio for costs of the settlement. During the litigation, Gordon's then-attorney admitted that he negotiated the producer's 1994 separation from Fox without knowing about a 1991 agreement on which Fox based its lawsuit.

The showdown between studios became particularly nasty during recent weeks, with Gordon and the film's other producer, Lloyd Levin, lashing out at Fox for making a claim on the film.

But with the dispute settled, the statement took a positive tone: "Warner Bros. and Fox, like all 'Watchmen' fans, look forward with great anticipation to this film's March 6 release in theaters."