Brother Shatterstone said:
That doesn't make any sense if you ask me and there for is probably the right answer...
How WB, who owns the rights to both character, live action, print, animation, etc could have issues about rights seems to stupid to fathom...
Eh, it gets thorny. See, Warner and WB are going to be probably separate but related entities. But that whole 'separate' part is what confuses things. And it depends on the contracts for the various rights. Different entities may own the rights to different venues. TV and film rights are two totally different things, as well as who gets to distribute those. Usually a company will sew up all related rights, but sometimes things slip through the cracks.
A well-known incident popped up for a series of Anti-drug comics starring the (Perez era) Teen Titans. The anti-drug comic was sponsored by a cookie company. Robin was part of the Teen Titans, but his character was licensed to a rival of the cookie company at the time, so could not appear. A new character was created at the last minute and inserted. (I've seen original art from that series; There's this blob of white-out-like stuff under every appearance of Protector; hold it up to the light and you can faintly see the Robin art underneath). Thus, even though DC 'owned' Robin, they couldn't license him out willy-nilly; it all depended on who had bought right to him first.
That's the kind of silliness that held up production of a Spider-Man movie for years; Marvel had sold off rights to Spider-Man to a number of companies. Those rights move when companies disband or are acquirred by others companies. Thus, Spider-Man ended up being in the hands of like a half-dozen people, some of whom had video rights, some had TV rights, some had distributuion rights, etc, and all of whom wanted a part of the pie, or some aspect of control over the property. Marvel finally got most of that tangle untangled. Warner has still yet to do that.
The Smallville producers likely have a contract to use certain items from the Superman license. That like as not does not include the Batman license. They can get away with the occassional thing like mentions of Oliver Queen and Wally West, mainly because those characters are not tied up in someone elses rights package. Like as not as well, DC or Warner might have some veto power or script approval power written into the contract. Usually that's the case with major characters, so someone doesn't get a wild hair and decide to write a script where Clark comes out of the closet and shacks up with Wesley, or Lana decides she's going to join the KKK.