The widow and daughter of Billy T. James are considering legal action for what they claim is their share of royalties from DVD sales estimated to be worth $3 million.
Sony Music Entertainment released The Comic Genius of Billy T James before Christmas 2008 and sold more than 100,000 copies, making it one of New Zealand's best-selling DVDs.
Sony believed it had obtained the rights to use film and sound tracks in an agreement with the Billy T. James Family Trust, which has administered the comedian's affairs since his death.
But his wife, Lynn Matthews, is challenging Sony's claim to the rights and is seeking royalties and damages.
Ms Matthews declined to comment on the dispute.
But it is understood it stems from her claims of intellectual property rights over some Billy T. James recordings and scripts. She has assigned those rights to independent label Pagan Records to license on her behalf.
Pagan representative Tim Moon declined to discuss specifics, but said legal action was possible.
"These companies rely on copyright legislation in running their businesses. Billy's family are entitled to the same reliance."
Sony bosses in New Zealand referred inquiries to Australian headquarters where general manager of legal and business affairs Raani Costelloe issued a written statement.
He said the issue involved multiple rights holders, including the family trust and Pagan Records.
"Sony Music Entertainment (New Zealand) is confident it can come to a commercial arrangement with Pagan Records after recently concluding an arrangement with The Billy T James Family Trust."
The trust was set up after the entertainer died from a heart attack in August 1991 without leaving a will.
Sole beneficiaries of the trust are Ms Matthews and Cherie James.
Mick Sinclair was Billy T. James' lawyer for two years before his death and is a trustee of the family trust.
He said the Billy T. James Family Trust "had no problems with Sony at all" as the music giant had reached an agreement before releasing the DVD.
But the matter was complicated by the fact that James died without a will.
The trust had administered his affairs since 1991, but only recently learned that Ms Matthews had been granted control of the estate through a High Court order in 1992 issuing "letters of administration" to her.
That is believed to have led to a situation where the different parties can claim rights to some recordings and scripts.
Known for his infectious giggle and trademark black singlet and yellow towel around his neck while reading Te News, Billy T. James remains one of New Zealand's favourite personalities nearly 19 years after his death.
A book written by Matt Elliott in collaboration with Ms Matthews, The Life and Times of Billy T. James, topped the best seller list after being published in October.
In a survey published last August by the New Zealand Listener, James was named the greatest exponent of Kiwi humour, with 48 per cent of votes. John Clarke was second on 12.