A super battle over 'Watchmen'

The iconic image from " Watchmen," Alan Moore and Dave Gibbons' ground-breaking graphic novel, is a yellow button sporting the familiar happy-face design. Next to the cheerful smile, though, you'll find a foreboding splatter of blood. ¶ That good-news-bad-news contradiction also fits the high-stakes legal tussle surrounding the movie version of the novel -- a film that holds great creative and financial promise but is now being overshadowed by a bitter copyright- infringement lawsuit that threatens "Watchmen's" distribution. ¶ Directed by Zack Snyder and starring Billy Crudup, Patrick Wilson and Jackie Earle Haley, "Watchmen" is one of the spring's most anticipated releases, and fan interest exploded after Snyder showed his film's trailer at July's Comic-Con in San Diego. The sprawling Cold War-era drama about a band of masked crime fighters is scheduled to arrive in theaters March 6, almost two years to the day after Snyder's global blockbuster "300" premiered. ¶ It's taken more than 20 years and any number of false starts to bring "Watchmen" this far along: Forsaken film adaptations include versions from directors Terry Gilliam ("Brazil"), Paul Greengrass ("The Bourne Ultimatum") and screenwriter David Hayter ("X-Men"), with countless script revisions along the way. Joaquin Phoenix was once considered for Crudup's starring part as Dr. Manhattan, the all-powerful but tortured soul at the center of the "Watchmen" story. Early screenplay costs and abandoned preproduction fees total close to $10 million, and no fewer than four studios have worked on the movie over the decades, including 20th Century Fox, Warner Bros., Paramount and Universal.

The film's long path to the screen factors prominently in the litigation and is at the center of another, far less public, "Watchmen" dispute between Paramount and Warners.

In the main case, 20th Century Fox believes that no matter how many hands "Watchmen" has passed through, Fox controls the right to make or, at the very least, distribute "Watchmen," even though Warners is currently producing and distributing the film.

As Fox sees it, Warners infringed on Fox's rights, and "Watchmen" producer Lawrence Gordon gave Warners rights he didn't possess. Warners says Fox's claim is baseless and, as one of its court filing says, "opportunistic" -- a last-minute, backdoor attempt to cash in on another studio's potential hit.

In Warners' view, Fox repeatedly declined to exercise any purported rights to become involved in the film during its various incarnations over the years, and in an e-mail even bad-mouthed the script that Warners greenlighted. The "Watchmen" case dramatizes the complex deal making that surrounds many high-profile projects and underscores how movie studios have grown addicted to comic-book franchises. In an era where "The Dark Knight" can generate $1 billion in global theatrical revenue, the well-executed superhero story has turned into Hollywood's Holy Grail. It's not just the box-office returns that are so meaningful to these kind of properties. A hit film can also sell truckloads of DVDs, help launch a theme-park ride, or generate millions in television sales. Fox, which has suffered through a demoralizing string of box-office flops this year, could desperately use such a movie. It felt its case against Warners was so strong it had no choice but to take the matter to court.

"They are not just fighting over 'Watchmen,' " entertainment attorney Mel Avanzado, who is not involved in the litigation, said of the duel between Fox and Warners. "They are also fighting over sequel rights. Whoever controls the franchise probably controls quite a bit."

As part of its legal strategy against Warners, Fox is trying to block "Watchmen's" theatrical release, claiming that it would cause the studio irreparable harm. The case has been scheduled for trial in U.S. District Court in Los Angeles in early January, but Fox and Warners are set to enter a non-binding mediation toward the end of November.

So far, though, the parties have not participated in any settlement talks, evidence that the legal skirmish -- just like the mysterious murders of key characters in "Watchmen" -- could grow more brutal before it gets better.

Living up to its 'unfilmable' tag

When DC Comics began publishing Moore (the writer) and Gibbons' (the illustrator) 12-part series in 1986, "Watchmen" took the comic book from the domain of pop entertainment into the realm of literary fiction. The comics were combined into a graphic novel that won the prestigious science-fiction Hugo Award and was listed by Time magazine among the top 100 modern English-language novels.

But everything that made "Watchmen" a landmark moment in the comic-book world also made it a daunting property for Hollywood. A story that unfolds over four decades with nearly a dozen major characters, "Watchmen" also takes place in an alternative reality where Richard M. Nixon was president well into the 1980s. The graphic novel told its story not just with illustrated panels and dialogue, but with faux primary documents, such as medical reports and excerpts from one character's autobiography. "Watchmen's" darkness was another issue: Was America ready to watch one superhero rape another?

While the visual style and interconnecting story lines of the "Watchmen" comics made it among the most cinematic comics of its era, the conventional wisdom was that its story was "unfilmable," as Snyder himself has often pointed out.

Nevertheless, not long after its publication, Fox acquired "Watchmen's" motion picture rights, and brought Joel Silver (who would later make "The Matrix") in as a producer. The studio hired several screenwriters to adapt the story, including Sam Hamm (" Batman") and Gilliam's "Brazil" collaborator, Charles McKeown, but the movie stalled in development.

The lawsuit hinges on what happened next, and the following is a summary of what Fox and Warner Bros. are alleging.

In 1991, Fox entered into an agreement with Gordon, a former Fox studio chief, under which Fox transferred some of its "Watchmen" rights to Gordon. The studio believes the 1991 deal gave Fox distribution rights to the film and a share of "Watchmen" and any sequel's profits if Gordon made the film elsewhere. Three years later, Fox entered into another agreement with Gordon, this time saying that Fox was putting the film in turnaround (meaning the studio would not be making it at the time and Gordon could try to sell the project to someone else), according to court documents and people close to the dispute. As Fox interprets that 1994 deal, Gordon wouldn't fully control "Watchmen's" production rights until he reimbursed Fox its development costs (with interest, now in excess of $1 million, Fox says), a payment Fox says Gordon never made. Furthermore, if Gordon changed any of the key creative elements behind "Watchmen" (such as director, screenwriter or principal cast), he was obligated to resubmit the movie to Fox, which would have a few days to rejoin the production if it wanted, the studio maintains. (Fox says Gordon never informed Fox of the change when Snyder came aboard.)

This "changed elements" clause is crucial to many turnaround deals, because it protects the studio that is walking away from a movie from being burned if the film is reincarnated as a more appealing production elsewhere. If a studio, for example, puts into turnaround some spy thriller starring Gary Coleman only to see a competitor recast the film with Will Smith, it's natural it would immediately want back in.

Changed elements clauses "have been around as long as I can remember," said entertainment attorney Daniel H. Black of Greenberg Traurig, a firm that is not involved in the "Watchmen" litigation. "The studio is saying, 'Look, as this project is currently configured, we are not going to pursue it.' But the changed elements clause is going to obligate me to come back to you and offer you a chance to come back in."

After "Watchmen" left Fox, it went through a number of changes.

Gordon brought the movie to Universal in 2001 with Hayter set to write and direct the film. Universal knew the film would be an expensive, visual-effects-heavy production, and never felt fully confident in its merits, according to a person familiar with "Watchmen's" time at Universal.

In 2004, the project migrated from Universal to Paramount, which (as is industry custom) paid Universal 10% of its "Watchmen" development costs for the chance to put the movie together, according to two people familiar with the deal; had Paramount made the movie, it would have been obligated to reimburse Universal the remaining 90% of the studio's expenses on the film's screenplay drafts.