The answer is simple. Pure ignorance on behalf of King Features. This was probably due to the fact that in the 1930's, Bluto only appeared in one story of the Popeye comicstrip and it was right around the time when the Fleischers were getting ready to introduce Popeye to the big screen. Since Popeye needed a foe, the Fleischers chose Bluto and he became Popeye's regular opponent in the theatrical cartoons. In the Popeye comicstrip, Popeye's biggest nemesis was the Sea Hag. So, once the 1960's came around, the people at King Features were completely clueless and thought that Paramound held the rights to the name Bluto, when in fact King Features did.