Lawsuit
On August 30, 2011, Napoleon Pictures filed a lawsuit against Fox Searchlight for $10 million for underreporting royalties and taking improper revenue deductions. In its term sheet, Fox agreed to pay 31.66 percent of net profits on home video. The lawsuit says that a 2008 audit revealed that Fox was only paying net royalties on home videos at a 9.66 percent rate, and there were underreported royalties and improper deductions.
Napoleon Pictures also alleges that Fox has breached the agreement in multiple other respects, including underreporting pay television license fees, failing to report electronic sell-through revenue, charging residuals on home video sales, as well as overcharging residuals on home video sales, deducting a number of costs and charges Fox has no right to deduct and/or for which there is no supporting documentation.
In May 2012, Fox tried to defeat the lawsuit on summary judgement, but it was rejected and the trial officially began on June 19, 2012.
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