Paramount sued the late author's estate in February for copyright infringement after Puzo's son, Anthony, allowed Ed Falco, a novelist and short story author who oversees the creative writing program at Virginia Tech, to pen a prequel to the celebrated mob saga.
The studio said in court documents it was afraid Falco's book, "The Family Corleone," could damage "the integrity and reputation of the 'Godfather' trilogy -- one of the most acclaimed and beloved artistic works of the past 50 years," the New York Daily News reported.
The Puzo estate filed a counterclaim saying Paramount's suit breached a 1967 rights agreement that excluded "book publishing rights," The Hollywood Reporter said Friday. Due to the breach, the estate sought to terminate Paramount's rights to the franchise.
"The Family Corleone," was allowed to be published in an interim deal in May, though profits from its sale were held in escrow until a deal could be reached between the two sides.
A federal judge in New York dismissed many of the counterclaims, but allowed the breach of contract suit to continue, The Hollywood Reporter said.
The two sides reached a settlement this week, though the terms of the deal were not made public.
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