The New York Times has an extensive analysis of 20th Century Fox’s lawsuit with Warner Bros over the rights to Watchmen. Here is an excerpt which I think explains the situation better than anyone else:

“On its face, turnaround is a contractual mechanism that allows a studio to release its interest in a dormant film project, while recovering costs, plus interest, from any rival that eventually adopts the project. But turnaround is a stacked deck. The turnaround clauses in a typical contract are also insurance for studio executives who do not want to be humiliated by a competitor who makes a hit out of their castoffs. That trick turns on a term of art: “changed elements.” A producer of a movie acquired in turnaround who comes up with a new director, or star, or story line, or even a reduction in budget, must give the original studio another shot at making the movie because of changed elements, even if a new backer has entered the picture. Thus, “Michael Clayton” was put in turnaround by Castle Rock Entertainment (which, like Warner, belongs to Time Warner). When George Clooney became attached to star in it, however, Castle Rock stood on its right to be involved as a producer of what turned out to be an Oscar-nominated film.”

Basically, Fox’s lawsuit says that while the studio had declared a willingness to part with the project in 1991, the claim is that Lawrence Gordon was supposed to, but didn’t resubmit Watchmen to Fox every time he came up with a changed element. You can read the whole article on NYTimes.com.