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June 22, 2001


The opinion of the court was delivered by: Ackerman, District Judge.


This matter comes before the court on motion of defendant/counterclaimant, Bruce Springsteen ("defendant" or "Springsteen") for summary judgment dismissing with prejudice all claims of plaintiff's Pony Express Records, Inc.("Pony Express") and JEC Music USA, Inc.("JEC Music") (collectively "plaintiff's") and for summary judgment with respect to the issue of liability on each of his counterclaims and the award of statutory damages, costs and attorney's fees. For the reasons stated below, Springsteen's motion for summary judgment dismissing with prejudice all claims of plaintiff's is granted and Springsteen's motion for summary judgment with respect to the issue of liability on each of his counter claims is granted in part and denied in part. Springsteen's motion for award of costs and attorney's fees is reserved for trial.


In 1972, Springsteen entered into three written agreements with three different entities. The first agreement, dated March, 1972, was between Springsteen and Laurel Canyon Management, and provided that Laurel Canyon Management would act as Springsteen's personal manager ("Management Agreement"). The second agreement, dated March, 1972, was between Springsteen and Laurel Canyon Productions, and provided that Springsteen would render exclusive recording services to Laurel Canyon Productions, that his interest in those recordings would be transferred to Laurel Canyon Productions, and that during the term of the agreement, Springsteen would not make any recordings for any other party ("Recording Agreement"). The third agreement, dated May, 1972, was between Springsteen and Sioux City Music, Inc.("Sioux, Inc."), and assigned to Sioux, Inc. the copyright to all songs Springsteen had written to date and any songs he would write during the agreement's term ("Songwriters Agreement").

Springsteen contends that each of the three entities with which he entered into agreements was jointly owned by James Cretecos ("Cretecos") and Michael Appel ("Appel"). Plaintiff's contend, however, that Cretecos was the sole owner of Sioux City Music, Inc., because Appel was an employee of a separate songwriting firm and wanted to keep his employment relationship with that firm distinct from his business relationship with Springsteen.

Sioux City Music, Ltd., (Sioux, Ltd.) was incorporated in the State of New York on October 5, 1972, and was jointly owned by Cretecos and Appel. Springsteen asserts that Sioux, Ltd. was the successor to the unincorporated Sioux, Inc. named in the Songwriter's agreement. In support of his claim, Springsteen cites the cover of his first album, released in 1973, which states that Sioux Ltd. owned the rights to the compositions contained therein, and the fact that prior to the album's release, Cretecos filed applications on behalf of Sioux, Ltd. to register copyrights in the album's compositions. Since Sioux, Ltd. never signed any agreement with Springsteen, Springsteen maintains that Sioux, Ltd. must have obtained its interest in Springsteen's songs as the successor to Sioux, Inc. Springsteen also provided an affidavit from Appel's and Cretecos's attorney at the time, stating that the attorney believed that Sioux, Ltd. was the successor in interest to Sioux, Inc., and that he had drafted and executed a short form assignment assigning all and any assets of Sioux, Inc. to Sioux, Ltd. See Nathan Cert., Ex. 7 at para. 29. Plaintiff's assert, however, that there is no written evidence that Sioux, Ltd. is the successor to Sioux, Inc., and that Cretecos never surrendered his ownership of certain of Springsteen's unpublished work which he acquired as the sole owner of Sioux, Inc.

Sioux Ltd. filed an amendment to its Certificate of Incorporation on April 24, 1973, changing its name to Canyon Music, Ltd. In or about 1974, Cretecos sold all of his interest in the Laurel Canyon Productions, Laurel Canyon Management, and Laurel Canyon Music (collectively "Laurel Canyon Companies") to Appel. On May 27, 1977, Springsteen, Appel and the Laurel Canyon Companies entered into agreements (the "Basic Agreement" and the "Co-publishing Agreement") which provided that, with the exception of certain songs identified as the "Joint Copyrights," none of the Laurel Canyon Companies (or their predecessors) had "any rights, entitlements, interests or claims . . . in and to any musical compositions, melodies, lyrics, writings, audio recordings of any nature, films, tapes, performances and any and all other artistic creations, by, pertaining to or relating in whole or in part to Springsteen alone or with others Finally, on May 13, 1983, Appel and the Laurel Canyon Companies sold, assigned and transferred to Springsteen all their remaining rights, title and interest in and to any Springsteen compositions, including the Joint Copyrights.

Plaintiff's assert that the Basic Agreement does not clarify Springsteen's rights to the unpublished work claimed by Cretecos, because it does not include the appendix of specific materials transferred that it references in paragraph 9. Therefore, the Basic Agreement does not provide evidence of whether songs rights belonging to Sioux, Inc. were transferred under the Basic Agreement.

On June 2, 1995, Cretecos sold his alleged interest in previously unpublished Springsteen compositions and sound recordings ("unpublished works") to JEC (the "JEC Agreement"). See Nathan Cert., Ex. 18. JEC subsequently purported to grant Pony Express an exclusive license to the sound recordings pursuant to a written agreement dated July 11, 1995. In 1995 and 1996, JEC obtained copyright registrations for Springsteen's unpublished work (See Complaint, Schedule A), representing in the copyright applications that the copyrights for the unpublished works had been transferred to JEC.

By written agreement dated March 13, 1997, Pony Express purported to grant to Masquerade Music ("Masquerade") an exclusive license to sell and distribute, in all territories other than the United States and Canada, a compact disc entitled "Before the Fame" containing certain of the previously unpublished compositions and sound recordings (the "License Agreement"). See Nathan Cert., Ex. 27. Among other things, the License agreement granted Pony Express and JEC Music the right to control the prosecution or defense of any litigation outside the United States and Canada regarding "Before the Fame."

Springsteen filed suit in the High Court of Justice, Chancery Division, in London, England on the grounds that Masquerade was not authorized to distribute his compositions and sound recordings. See Bruce Springsteen v. Flute International Ltd. et at, CH 1996-S-4998, CH 1996-S-7661, and Bruce Springsteen v. Masquerade Music Ltd. et at, CH 1997-S-1559 (collectively, the "UK Litigation"). Masquerade's defense to Springsteen's claim was that it had the right to exploit the compositions and sound recordings pursuant to the purported license from Pony Express and JEC, who in turn had received that right from Cretecos.

According to the Springsteen, the case went to trial in October of 1998 after extensive pretrial proceedings and lasted nearly two weeks. During the trial, Masquerade's counsel cross-examined Springsteen's witnesses, challenged Springsteen's evidence, and presented additional witnesses and evidence on Masquerade's behalf. Plaintiff's allege that Masquerade did not permit plaintiff's to participate in that litigation, despite the written agreement requiring Masquerade to do so, and so on March 16, 1998, plaintiff's terminated their licensing agreement with Masquerade.

On December 10, 1998, the UK Court issued a seventy-four page judgment in favor of Springsteen (the "UK Judgment"). See Nathan Cert., Ex. 23. The UK Judgment held that Cretecos did not have individual dealings with Springsteen, but only dealt with Springsteen in Cretecos's capacity as Appel's partner. See id. at 32-34. The UK court also found that Sioux, Inc. was owned jointly by Cretecos and Appel; that the copyrights in Springsteen's compositions were transferred to Sioux, Inc. pursuant to the May 1972 Songwriters Agreement; and that Sioux, Inc. was incorporated as Sioux, Ltd. See id. at 34-39; 40-52. Springsteen subsequently obtained copyright registrations in 16 songs in or around January, 1999. See Nathan Cert., Ex. 25.

An essential element of each party's claims is that party's ownership of copyrights in Springsteen's unpublished works.*fn1 The issue of ownership turns upon whether Cretecos ever individually owned any of Springsteen's unpublished work and if so whether he retained ownership or transferred it with the sale of Sioux, Ltd. In his motion for summary judgment on plaintiffs' claims, Springsteen contends that the UK Judgment estops the plaintiff's from litigating the critical issue of whether Cretecos had obtained any individual interest in Springsteen's recordings through Springsteen's agreement with Sioux, Inc., and whether the property of Sioux, Inc. is distinct from the property of Sioux, Ltd. Springsteen also contends that the undisputed material facts establish that Springsteen owns the copyright in the contested compositions and sound recordings, and therefore, Springsteen should be granted summary judgment. Finally, Springsteen argues that the plaintiffs' claims should be dismissed because plaintiff's have failed to prosecute those claims. Plaintiff's respond that the UK Judgment does not estop them from litigating in New Jersey, because they were prevented by Masquerade from participating fully in the UK litigation. Plaintiff's also contend that disputed issues of fact exist as to the copyright ownership in the songs. Finally, plaintiff's contest Springsteen's accusation of failure to prosecute. This court will first address the impact of collateral estoppel on Springsteen's motion for summary judgment as to plaintiffs' claims and will then address Springsteen's motion for summary judgment as to his own counterclaims.

Summary Judgment as to ...

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