Paramount executives filed suit at Manhattan Federal Court in New York against the son of Puzo, who wrote the bestselling 1969 book on which the film franchise was based.
Studio bosses claim they had an agreement with Puzo's heirs in 2002 that they would only release one sequel to the original novel - but the family published a second sequel and is planning a third release later this year (12).
However, Puzo's estate officials have now hit back with a counter-claim, filed on Monday (12Mar12), insisting, "Paramount wanted a war, and they're going to get one."
The suit claims Paramount bosses were informed about the upcoming book and did not object to 2006's The Godfather's Revenge, reports Reuters.
The legal papers state, "The Puzo Estate, representing the children of Mario Puzo, needs no permission from Paramount to use the title of their father's novel or to publish a sequel novel or to use what Paramount claims are 'the Godfather works'."
Family attorney Bertram Fields adds, "Mario Puzo brought vast wealth to Paramount at a time when they desperately needed it. Now that he's gone, Paramount's trying to deprive his children of the rights he specifically reserved.
"I promised Mario I'd protect his kids from this kind of reprehensible conduct. Paramount wanted a war, and they're going to get one - only the stakes will be much higher than they thought."
The estate lawyers want Paramount's rights to the original The Godfather book terminated and are seeking $10 million in damages.