Update: Tolkien Estate Counter-Sued by Warner Brothers!

An announcement came this week that film giant Warner Brothers is launching a counter-suit against the estate of late Lord of the Rings author JRR Tolkien, as a response to an $80 million legal action by the estate which claimed that it seeks to prevent the studio from overstepping its rights in the Hobbit like it did in case of the Lord of the Rings, when it extended licensing rights to online slot machines.

In its counter-suit, however, Warner is demanding damages for alleged breach of contract, claiming that the estate's action resulted in disrupting licensing to branded slot machines in casinos and arcades, along with online games, thus damaging the profitability of the first film in the Hobbit trilogy, The Hobbit: An Unexpected Journey.

Furthermore, the suit reads: "Because of the repudiation, Warner has not entered into license agreements for online games and casino slot machines in connection with The Hobbit – a form of customary exploitation it previously had utilised in connection with the Lord of the Rings trilogy – which has harmed Warner both in the form of lost license revenue and also in decreased exposure for the Hobbit films."

On the other side, the Tolkien estate states that the Warner allegations are "entirely without merit," accusing the film studio of bullying tactics, and claiming that they are suing the estate because the estate sued them to protect its rights in the Hobbit series.

The estate's legal representative, Bonnie Eskenazi, issued a statement on the affair, saying: "The Tolkiens and HarperCollins filed this lawsuit in order to force Warner Bros and Zaentz to live within the boundaries of the contract to which they agreed. Warner and Zaentz's amended counterclaims are simply an attempt to punish the Tolkiens and HarperCollins for having the nerve to stand up to the studios and tell them that they can't take more rights than were granted to them by contract. Luckily, the law protects people like the Tolkiens and HarperCollins from these kinds of intimidation tactics."

Zaentz is referred to in relation to another counter-action over the use of the Hobbit brand.

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