The move by the Tolkien family to sue Time Warner’s New Line Cinema for a percentage of the profits from the Lord of the Rings trilogy in July 2009 jeopardised the future of Guillermo del Toro’s adaptation of J. R. R. Tolkien’s The Hobbit, which was in pre-production in New Zealand at the time and due for release in 2011.

In the case, Christopher Reuel Tolkien v New Line Cinema Corp, the son of the author and the Tolkien Trust claimed not only £133 million ($220 million) compensation for undistributed profits from the films and the option to terminate other film rights to Tolkien’s work, claiming breach of contract.

In 1969 the author sold film rights to the trilogy for £250,000 and 7.5% of future profits. The Lord of the Rings Trilogy earned more than $6 billion in theatrical and DVD sales, but the estate claims it had yet to receive a penny from New Line or Time Warner. In their defence, lawyers for New Line claimed that terms of the 1969 contract were ‘ambiguous.’

Bonnie Eskenazi, the lawyer representing the Tolkien Trust said, ‘Should the case go all the way to trial, we are confident that New Line will lose its rights to The Hobbit.'