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Fox, on the other hand, will emerge with an upfront cash payment that sources pegged between $5 million and $10 million, covering reimbursement of $1.4 million the studio invested in development fees, and also millions of dollars in legal fees incurred during the case.

More importantly, Fox will get a gross participation in "Watchmen" that scales between 5% and 8.5%, depending on the film’s worldwide revenues. Fox also participates as a gross player in any sequels and spinoffs, sources said.

U.S. District Court Judge Gary Feess told lawyers for Fox and Warners that a series of 1990s contracts between Fox and Watchmen producer Larry Gordon were so open to interpretation that he could not render a pre-trial judgment for either party, as the lawyers had requested.

Fox sued Warners in February, arguing that Gordon - who once ran Fox - assigned Watchmen rights to Warner that he didn't possess. Warner maintains that Fox holds no copyright on the movie.