The first movie to use it was Death of a Gunfighter. During its filming, Richard Widmark was unhappy with director Robert Totten. He arranged to have Totten replaced by Don Siegel. When the film was finished, neither Totten nor Siegel wanted to be credited with the result. At first it was decided that the credit should go to Al Smith, but the DGA said there had already been a director by that name. The DGA decided the film could carry the pseudonym "Allen Smithee". Smithee's work was praised by film critics. The New York Times commented that the film was "sharply directed by Allen Smithee who has an adroit facility for scanning faces and extracting sharp background detail."
In 1997 the comedy An Alan Smithee Film: Burn Hollywood Burn was released, in which a director wants to disown a film but cannot because his real name is Alan Smithee. The publicity around this movie, and especially around the fact that director Arthur Hiller asked for and got an Alan Smithee credit for it, made the Directors Guild decide to discontinue using the Alan Smithee credit.
Another affair that may have played a role was the one around American History X, where director Tony Kaye asked for a Smithee but did not get it because he had publicly attacked the movie. Kaye later sued the Guild over its decision.
After this, the Guild decided to choose a pseudonym for each case separately, rather than re-use a particular pseudonym. The first such example is the Thomas Lee credit for Walter Hill on Supernova (2000).
This change has not ended the practice of using the Smithee pseudonym entirely. For example, the Canadian film Fugitives Run starring David Hasselhoff is also credited to Smithee, as are the 2003 films Cowboys Run and River Made to Drown In. (Source)
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