Do you know where was Saul Zaentz (Tolkien Enterprises) during the lawsuit? What his involvement or non-involvement may have been?
At findlaw-dot-com, there is a 22 page article about the Estate’s case against New Line. Going over the first page of the article, it appears that Tolkien sold the movie rights for a sum plus 7.5% of any “gross” revenues made from any films. The Estate basically charges New Line with withholding on the royalties owed to them.
That answers a couple question for me. New Line used “Hollywood accounting” to short the folks it owed money to. Even though the films made $6B. The Estate did some math and sued. And even though Saul Zaentz (Tolkien Enterprises) owns the rights to the films, New Line came in under his agreement made with Tolkien/his Estate to pay the him/theEstate revenues from any films.