What’s The Verdict: Colin Higgins Productions v. Paramount Pictures

What’s The Verdict? discusses Colin Higgins Productions v. Paramount Pictures home video royalties lawsuit 30 years after the fact!

Universal Studios payout, Check! Paramount Pictures payout, On its way! Colin Higgins Productions is on roll in an ongoing home video royalties lawsuit claiming the studios underpaid their royalties.  Most recently, the company and Universal Studios settled on a payout of $26 million!  I know, pocket change.  A couple weeks ago Colin Higgins Productions filed a class-action lawsuit against Paramount Pictures for a similar debacle.  Although Paramount filed a motion to dismiss the claims, it was rejected.

To be clear, Colin Higgins is one of several plaintiffs to challenge almost every major studio over the issue of home royalties.  Supposedly, the studios systematically underpaid by calculating participation share percentages…Instead of calculating participation shares of film revenue from the full 100 percent of home video revenue, it was calculated from only 20 percent.  The 20 percent calculation dates all the way back to the early years of VCR in the 80s. During this time, studios paid third parties to produce and distribute their home entertainment, where studios would receive 20 percent of the independent distributor’s profits, then divide the 20 percent to the profit participants. Eventually, studios developed in-house home entertainment divisions.

At any rate, the studios began writing into contracts that they would pay filmmakers based on 20 percent of home video revenues.  This was and is the industry standard, so, what’s the issue?  The plaintiffs claim that their contracts prior to the 80s didn’t specify this 20 percent calculation; thus, they should’ve been paid based on 100 percent of revenues.  Here’s what it comes down to… the studio says the company knew about the 20 percent calculation whereas the company says they couldn’t have known until recently. There was a 1981 audit report indicating a 20 percent pay to the company; however, the plaintiffs’ attorneys argues that this report was limited in time and did not say ‘this is how it will be from here on out.’

I’m big on contracts, it is what I do, but there is clearly an issue in terms of the contractual agreement and lack of update on standards and/or negotiation.  I’m also wondering how the Colin Higgins Productions, based on its argument, couldn’t have known until recently about the 20 percent-based accounting. This is 30 years after the fact, how did you not notice?  Stay tuned for updates on the case!

P.S. Films of Colin Higgins Productions include Foul Play (Paramount 1978) and The Best Little Whorehouse (Universal 1982)

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