I would think there would have been a clause in the contract that allowed all the rights to the Godfather to revert back to the Puzo estate if Paramount didn't make any more Godfather movies. This happens with superhero movies all the time -- studios make them so the rights don't revert back to Marvel Studios.
Since Paramount hasn't made a Godfather movie in 22 years, they don't have much of a case, IMO.
Puzo quite famously got raped when he sold the book to Paramount. He never got over it, either. If you read "The Last Don," you'll see a lot of anger directed at the studios in that book (that's actually what ruined it for me). I don't think his family shares in any of the video game proceeds and that's what they're most angry about. But honestly, who would have thought of a video game clause in a movie contract 40 years ago?
