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Chinese court orders Paramount Pictures to pay ¥2 million compensation over Transformers: Age of Extinction dispute

The US film producer of the hit Hollywood film Transformers: Age of Extinction has been ordered by a Chinese court to pay compensation of about 2 million yuan (HK$2.3 million) to a Chinese tourist resort over a dispute involving product placement.

A court in Chongqing in the southwest of the country, gave its verdict on Thursday against Paramount Pictures and 1905, its Chinese partner, a Beijing-based film studio, China National Radio reported.

The lawsuit had been launched by the resort’s management company, Wulong Karst Tourism in 2014.

The Chinese company formed by the government of Wulong county – renowned for its stunning eroded limestone landscapes, known as karst – said it had agreed with the film-makers that a logo of the resort would be included in the final film.

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Paramount Pictures and 1905 had failed to fulfil the major obligations of the agreement signed with the resort in 2013, but later had partly made up for the resort’s loss, the court ruled.

Wulong Karst Tourism, which had originally demanded compensation of 20.8 million yuan, had promised in the contract to pay sponsorship of 6 million yuan to Paramount and would allow the film’s production crew to shoot in its natural setting in exchange for the name of the park being promoted in the film.

However, in the final film, Paramount had failed to include Wulong scenic park’s name or a specially produced logo – featuring the characters “China Wulong” – in images or dialogue spoken by actors, the court said.

At a hearing in April the defendants admitted they had failed to use the logo, but as compensation, they had later allowed the film’s director, Michael Bay, to make an advertisement for the resort and also left behind properties built for the film as tourist attractions.

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The court ruled Paramount had broken the agreement, but partly made up for it which meant a compromise should be reached and a reduced level compensation of 1.8 million yuan should be paid for the loss of expected income, plus 209,000 yuan to cover Wulong Karst Tourism’s legal fees.

The court also rejected a countercharge filed by the defendants.

Paramount had filed a claim in March demanding more than 12 million yuan, which would have included compensation over the remaining part of Wulong Karst Tourism’s unpaid fee agreed in the contract and a fine for the delay over the payment.

The tourism resort had paid 4.8 million yuan in advance but withheld the rest after it found its name and logo did not appear in the film.

The resort company’s deputy executive president was quoted as saying that he was “generally satisfied” with the court’s verdict, and would decide whether to launch an appeal of the level of compensation after talking to his lawyer.

He denied claims that the resort had been trying to advertise itself by launching the high-profile lawsuit.