Read: SIEGEL et al v. TIME WARNER INC., D.C. COMICS et al

Lots of people have written in to ask about “The Superboy Situation.” Namely, what exactly is going on with the lawsuit that is preventing DC Comics from using Superboy in their comics, or even mentioning his name in public.

Well, ask no more! Clickthrough to read the lawsuit for yourself!

Just a warning. It’s loooong and in legalese.

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JOANNE SIEGEL and LAURA SIEGEL LARSON, Plaintiffs, v. TIME WARNER INC., WARNER COMMUNICATIONS INC., WARNER BROS. ENTERTAINMENT INC., WARNER BROS. TELEVISION PRODUCTION INC., and D.C. COMICS, Defendants.
CASE NO. CV-04-8776-SGL (RZx) [Consolidated for pre-trial and discovery purposes with CV-04-8400-SGL (RZx)]
UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA
496 F. Supp. 2d 1111; 2007 U.S. Dist. LEXIS 56910

July 27, 2007, Decided
July 27, 2007, Filed; July 30, 2007, Entered
PRIOR HISTORY: Siegel v. National Periodical Publications, Inc., 364 F. Supp. 1032, 1973 U.S. Dist. LEXIS 11458 (S.D.N.Y., 1973)

CASE SUMMARY

PROCEDURAL POSTURE: Plaintiffs, the widow and daughter of the creator of a comic strip character, sought a declaration that the termination notice, served on defendants pursuant to 17 U.S.C.S. § 304(c), was valid and that they had recaptured all of the copyright to the character. The court found for plaintiffs, leaving for trial the issue of defendants’ alleged infringement. Upon transfer of the case to another court, defendants moved for reconsideration.

OVERVIEW: The character embodied the youthful persona of a comic strip superhero conceived by the creator in the 1930s. The ongoing dispute regarding who owned the copyright to the character was first decided in 1947, under the Copyright Act of 1909, when a trial referee found that the rights belonged to the creator. But, while the matter was on appeal, the parties reached a settlement in which the referee’s findings were vacated, and defendants’ predecessor-in-interest was deemed to own all rights. Further litigation in the 1960s confirmed that result. Here, plaintiffs relied on the termination provision of the Copyright Act of 1976, 17 U.S.C.S. § 101 et seq., to assert their rights. The court determined that the referee’s findings from the 1947 action were to be given preclusive effect as a matter of collateral estoppel. Based on those findings, the court concluded that the creator’s submissions involving the character were not a work made for hire under the 1909 Act. Yet the court was unable to conclude whether the requisite “publication” of those submissions occurred or whether the submissions were part of a joint work, because of the unresolved matter regarding their derivative nature.

OUTCOME: The court granted defendants’ motion for reconsideration and vacated the prior court order in part. The portion of the order denying defendants’ motion for summary judgment on the issue of infringement, thus leaving the issue for trial, remained in effect.

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U.S. District Court Pleading(s)

COUNSEL: [**1] For Joanne Siegel, an individual, Laura Siegel Larson, an individual, Plaintiffs: Jeffrey Bruce Linden, Marc Toberoff , Nicholas Calvin Williamson, Rafael Gomez-Cabrera , LEAD ATTORNEYS, Marc Toberoff Law Offices, Los Angeles, CA.

For Time Warner Inc, a corporation, Warner Communications Inc, a corporation, Warner Bros Entertainment Inc, a corporation, Warner Brothers Television Production Inc, a corporation, DC Comics, a general partnership, Defendants: Adam Beriah Hagen , David L Burg, Michael Bergman , LEAD ATTORNEYS, Weissmann Wolff Bergman Coleman, Grodin & Evall, Beverly Hills, CA; James D Weinberger , Justin Deabler , Roger L Zissu , LEAD ATTORNEYS, Fross Zelnick Lehrman & Zissu, New York, NY; Jonathan Zavin , LEAD ATTORNEY, Loeb & Loeb, New York, NY; Patrick T Perkins, LEAD ATTORNEY, Perkins Law Offices, Cold Spring, NY.

For DC Comics, a general partnership, Counter Claimant: David L Burg, Michael Bergman , LEAD ATTORNEYS, Weissmann Wolff Bergman Coleman Grodin & Evall, Beverly Hills, CA; Patrick T Perkins, Perkins Law Offices, Cold Spring, NY. Roger L Zissu , Fross Zelnick Lehrman & Zissu, New York, NY.

For Laura Siegel Larson, an individual, Joanne Siegel, an individual, Counter Defendants: [**2] Marc Toberoff , Nicholas Calvin Williamson, Rafael Gomez-Cabrera , LEAD ATTORNEYS, Marc Toberoff Law Offices, Los Angeles, CA.

JUDGES: STEPHEN G. LARSON , UNITED STATES DISTRICT JUDGE.

OPINION BY: STEPHEN G. LARSON

OPINION
[*1113]

ORDER GRANTING DEFENDANTS’ MOTION FOR RECONSIDERATION

This case is the latest chapter in the continuing saga over who owns the copyright to “Superboy,” the youthful persona of the iconic comic book super hero “Superman,” spanning from the golden age of print media comics to the present-day revolution in digital media. Like the entire spectrum of graphics media technology, the law governing ownership rights to copyrights has changed dramatically, and it is precisely these changes in the law that bring this case to this Court.

Although the story of how Superman and later Superboy came into being has become the stuff of legend among comic book fans, the Court will recite it once more for those unfamiliar with the tale.

Jerome Siegel and Joseph Shuster are Superman’s creators. In 1933, Siegel conceived of the idea of a comic strip featuring a character who is sent to Earth from a distant planet and, with superhuman powers, performs daring feats for the public good. Siegel named his character “Superman.” [**3] Siegel discussed his idea with Shuster, an artist, and together they crafted a comic strip consisting of several weeks worth of material (both dialogue and artwork, some of the latter being completely “inked in” and ready for publication, and some consisting of no more than black-and-white pencil drawings) suitable for newspaper syndication embodying that idea. The two shopped the character around for a number of years to numerous publishers but were unsuccessful in having it published. In the meantime, Siegel and Shuster penned other comic book strips at their artist studio in Cleveland, Ohio, and sold them for publication, most notably “Slam Bradley” and “The Spy” to Nicholson
Publishing Co., who purchased their material for resale to Detective Comics. When Nicholson folded shop in 1937, Detective Comics acquired some of its magazine properties, including the comic book strips penned by Siegel and Shuster.

The two entered into an agreement with Detective Comics on December 4, 1937, whereby they agreed to furnish some of the existing comic strips for the next two [*1114] years and further agreed “that all of these products and work done by [them] for [Detective Comics] during said period of [**4] employment shall be and become the sole and exclusive property of [Detective Comics] and [Detective Comics] shall be deemed the sole creator thereof . . . .” The agreement further provided that any new or additional features by Siegel and Shuster were to be submitted first to Detective Comics, who was given the initial option (to be exercised within sixty days after submission) to publish the material. Soon thereafter Detective Comics became interested in publishing Siegel and Shuster’s now well-traveled Superman idea (but in an expanded 13-page comic book format), the interest eventually culminating with Superman’s release in April, 1938, in the first volume of Action Comics, a
new comic magazine issued by Detective Comics. The Superman comic strip became an instant success and Superman’s popularity continues to endure to this day as his depiction has been transferred to varying media formats.

On March 1, 1938, before Superman’s publication, Siegel and Shuster assigned to Detective Comics “all [the] good will attached . . . and exclusive right[s]” to Superman in exchange for $ 130. This assignment in ownership rights was later confirmed in a September, 22, 1938, employment agreement [**5] in which Siegel and Shuster acknowledged that Detective Comics was “the exclusive owners” of not only the other comic strips they had penned earlier for Nicholson (and continued to pen for Detective Comics) but Superman as well; that they would continue to supply the art work and storyline (or in the parlance of the trade, the “continuity”) for said comics at varying per page rates depending upon the comic in question (Superman being paid at the highest rate offered of $ 10 per page) for the next five years; that Detective Comics had the “right to reasonably supervise the editorial matter” of those existing comic strips; that Siegel and Shuster would not furnish “any art or
copy . . . containing the . . . characters or continuity thereof or in any wise similar” to said comic strips to a third party; and Detective Comics would have the right of first refusal (to be exercised within a six week period after the comic’s submission) with respect to any future comic strip creations conceived by Siegel or Shuster:

In the event you shall do or make any other art work or continuity suitable for use as comics or comic strips, you shall first give us the right to first refusal thereof by submitting [**6] said copy and continuity ideas to us. We shall have the right to exercise that option for six weeks after submission to us at a price no greater than offered to you by any other party.

Not long thereafter, on November 30, 1938, Siegel pitched the idea to Detective Comics of serializing a comic concerning the exploits of Superman as a young man. Siegel called his character “Superboy.” As Siegel explained the synopsis for the new comic strip:

Superboy . . . would relate the adventures of Superman as a youth. . . . I’d like the strip to have a large number of pages, such as 13 so that I could develop it as well as Superman. . . . Tho the strip would feature super-strength, it would be very much different from the Superman strip inasmuch as Superboy would be a child and the type of adventures very much different. There’d be lots of humor, action, and the characters would be mainly children of about 12-years rather than adults. Also, inasmuch as this strip will probably be used as a newspaper feature, I should think that you would want to own all rights to it by having it first appear in your magazine.

[*1115] Detective Comics, by a letter dated December 2, 1938, effectively declined to publish Siegel’s [**7] proposed Superboy comic. Siegel later re-pitched the idea in December, 1940, through the submission of a lengthy script containing the storyline and dialogue for the proposed comic strip’s first release or releases that fleshed out in greater detail the outlines of the Superboy story arch. Detective Comics again effectively declined to publish Superboy.

Siegel entered the United States Army in July, 1943, to serve his country during World War II. In December, 1944, while Siegel was stationed abroad, Detective Comics published, without notice to Siegel and without his consent, an illustrated five- page comic strip entitled “Superboy” appearing as one among many other comics strips in the body of volume 101 of its magazine More Fun Comics. The illustrations for the first Superboy comic strip were done by Shuster at the direction of Detective Comics. When Detective Comics published volume 101 to More Fun Comics it also secured a copyright in all the contents of the same under Copyright Registration No. B653651. Thereafter Detective Comics continued to publish (and Shuster for a period of time continued to illustrate) “Superboy” comic strips, first in its serialized magazine More [**8] Fun Comics, then in Adventure Comics, and eventually as a stand-alone feature in the self-titled comic book Superboy.

Detective Comics’ publication of Superboy increased an already growing rift between the parties predicated largely upon Siegel and Shuster’s conclusion that Detective Comics had not paid them their fair share of profits generated from the exploitation of their Superman creation, as well as the profits generated from characters like Superboy, which had his roots in the original Superman character. As a result, in 1947, Siegel and Shuster brought an action against Detective Comics’ successor, National Periodical Publications, Inc., in New York Supreme Court, Westchester County, seeking to annul and rescind their previous agreements with Detective Comics as void for lack of mutuality and consideration. As part of the suit Siegel argued that Detective Comics had no right to publish his “Superboy” creation. Towards that end, the third cause of action in the New York state court complaint asserted that the release of the Superboy comic strip in More Fun Comics, no. 101, “was based entirely upon the synopsis submitted” by Siegel to Detective Comics, “and contained in detail [**9] the same characters, incidents and plot” in the synopsis. (Defs’ App. of Docs. in Supp. Mot. Recons., Ex. 7 at P 30). The complaint further alleged that Detective Comics’ publication of Superboy was done “without the consent of” and without payment to Siegel. (Defs’ App. of Docs. in Supp. Mot. Recons., Ex. 7 PP 31, 33). These points were important as the third cause of action averred that Siegel’s Superboy submissions belonged to him alone in light of Detective Comics’ failure to exercise its right of first refusal under the parties’ September, 1938, contract. (Defs’ App. of Docs. in Supp. Mot. Recons., Ex. 7 PP 28-29). Essentially, the third cause of action pled that Detective Comics had stolen Siegel’s Superboy idea. (Defs’ App. of Docs. in Supp. Mot. Recons., Ex. 7 P 31 (averring that Detective Comic’s publication of Superboy “use[d] and was based upon the conception and idea as submitted in writing and detail by the plaintiff, SIEGEL”)).

In the alternative, the fourth cause of action in the complaint alleged that the “plot, conception and incidents” contained in Detective Comics’ Superboy publication “were based upon and copied from the plot, conception and incidents” of Siegel [**10] and Shuster’s Superman character, and that such misassociation between Siegel’s [*1116] Superman creation and Detective Comic’s Superboy was exacerbated by Detective Comics affixing, without Siegel’s consent, his name as the author to each of the Superboy releases. (Defs’ App. of Docs. in Supp. Mot. Recons., Ex. 7 PP 36, 37). In so publishing Superboy, it was alleged Detective Comics had “deceived the public” into believing that Siegel “was the author of the continuity dialogue and action of each of the individual releases” when in fact he “was not the author.” (Defs’ App. of Docs. in Supp. Mot. Recons., Ex. 7 P 36). Labeling such publication as “wrongful,” the fourth cause of action alleged that such unauthorized misassociation between the two was “injurious” to Siegel’s reputation. (Defs’ App. of Docs. in Supp. Mot. Recons., Ex. 7 P 38).

The complaint sought an accounting of the profits generated from Superboy’s publication and that further publication of Superboy be enjoined. (Defs’ App. of Docs. in Supp. Mot. Recons., Ex. 7 at page 29-30).

After a trial, official referee J. Addison Young, in an opinion dated November 21, 1947, concluded that the March 1, 1938, assignment of the rights to [**11] Superman to Detective Comics was valid and supported by consideration, and that, therefore, Detective Comics was the exclusive owner of “all” the rights to Superman. (Defs’ App. of Docs. in Supp. Mot. Recons., Ex. 8 at 371). With respect to Superboy, the referee found that it was solely Siegel’s creation; that Superboy was a work distinct from Superman (thus falling within the right of first refusal provision contained in the parties’ September 22, 1938, agreement); and that, on account of Detective Comics’ failure to exercise its option to publish Superboy when first presented with the idea, the rights to Superboy belonged to Siegel. As explained by the referee:

It is quite clear to me, however, that in publishing Superboy the Detective Comics, Inc. acted illegally. I cannot accept defendants view that Superboy was in reality Superman. I think Superboy was a separate and distinct entity. In having published Superboy without right, plaintiffs are entitled to an injunction preventing such publication and under the circumstances I believe the defendants should account as to the income received from such publication and that plaintiffs should be given an opportunity to prove any damages [**12] they have sustained on account thereof.

(Decl. Marc Toberoff, Ex. N at 323-24).

Shortly thereafter, on April 12, 1948, the referee signed a thirty-six page findings of fact and conclusions of law expanding upon the statements contained in the opinion he had tendered earlier. The factual findings pertinent to Superboy were as follows:

156. On or about November 30, 1938, the plaintiff SIEGEL, in writing and by mail, submitted to DETECTIVE COMICS, INC. for its consideration and acceptance or rejection, for publication, under the terms of the contract dated September 12, 1938, . . . a synopsis or summary of the idea and conception and plan of a new comic strip to be known as SUPERBOY[, which would narrate the adventures of SUPERMAN as a youth].

157. On December 2, 1938, DETECTIVE COMICS, INC. deferred consideration of a SUPERBOY comic strip until some future time.

158. DETECTIVE COMICS, INC. did not within six weeks indicate its election to publish the said new comic strip SUPERBOY.

159. DETECTIVE COMICS, INC. on or about December 2, 1938, by its letter in writing to the plaintiff SIEGEL did elect not to publish the said comic strip [*1117] SUPERBOY under the terms of the contract dated September 22, [**13] 1938, . . . .

160. During the month of December, 1940, the plaintiff SIEGEL submitted to DETECTIVE COMICS, INC. for its further consideration a complete script or scenario, containing the continuity, plan and dialogue for the first “release” or “releases” of the proposed new comic strip SUPERBOY, and that the said synopsis contained within itself the entire plan for the future publication of the said comic strip SUPERBOY and the conception of the character SUPERBOY, all set forth with detail and particularity.

162. DETECTIVE COMICS, INC. did not within six weeks after the submission of the said script or scenario indicate its election to publish the said comic strip SUPERBOY.

163. Thereafter and during December of 1944 DETECTIVE COMICS, INC. did publish a certain comic strip release entitled SUPERBOY in a magazine entitled “More Fun Comics.”

164. The said comic strip release entitled SUPERBOY embodied and was based upon the idea, plan and conception contained in the plaintiffs, SIEGEL’s letter to DETECTIVE COMICS, INC. dated November 30, 1938 . . . .

165. The said release of the said comic strip SUPERBOY published in December of 1944 embodied and was based upon the idea, conception and [**14] plan contained in the script or scenario submitted by the plaintiff SIEGEL to DETECTIVE COMICS, INC. in December of 1940 . . . .

166. Said first thirteen pages of SUPERMAN material [in Action Comics no. 1] did not contain the plan, scheme, idea or conception of the comic strip SUPERBOY as it was later submitted by the plaintiff SIEGEL to DETECTIVE COMICS, INC. [in the 1938 pitch or the later 1940 script].

167. Said first thirteen pages of SUPERMAN material [in Action Comics no. 1] did not contain the plan, scheme, idea or conception of the comic strip SUPERBOY as published by DETECTIVE COMICS, INC. . . . from December, 1944, until the date of the trial herein.

168. The said publication was without the permission of the plaintiff SIEGEL.

171. All of the comic strip material published under the title SUPERBOY was based upon the idea, plan, conception and direction outlined in the [1938 pitch].

172. All of the comic strip material published under the title SUPERBOY was based upon the idea, plan, conception and direction contained in the scenario or script . . . submitted by the plaintiff SIEGEL to DETECTIVE COMICS, INC. [in 1940].

173. The publication of all comic strip material entitled SUPERBOY [**15] was at all times without the permission of the plaintiff SIEGEL.

174. Plaintiff SIEGEL has received no payment on account of the publication of any of the material entitled SUPERBOY.

175. All publications of SUPERBOY by DETECTIVE COMICS, INC. from April, 1945 until . . . the date of the trial herein, contained affixed thereto the name of the plaintiffs SIEGEL and SHUSTER.

176. The use of the name of the plaintiff SIEGEL . . . was without the consent of the plaintiff SIEGEL.

179. Defendant INDEPENDENT NEWS CO., INC. knowing of the rights of the plaintiff SIEGEL, under the [September 22, 1938, contracts], sold and distributed to newsdealers for resale to [*1118] the public throughout the United States, magazines containing the material entitled SUPERBOY as hereinafter described and set forth.

180. All the art work for the SUPERBOY releases was prepared by plaintiff SHUSTER under the direction of DETECTIVE COMICS, INC.

181. Plaintiff SHUSTER was paid in full by DETECTIVE COMICS, INC. or defendant NATIONAL

COMICS PUBLICATIONS, INC. for all the art work furnished by him in connection with said SUPERBOY comic strip releases.

182. At the time that publication of the SUPERBOY comic strip was commenced, plaintiff [**16] SIEGEL was unavailable to furnish any of the continuity therefor being absent in military service.

183. Upon the return of plaintiff SIEGEL to civilian status in January, 1946, DETECTIVE COMICS, INC. entered into negotiations with him regarding SUPERBOY, proposing certain payments to him and affording him the opportunity of supplying the continuity for SUPERBOY releases.

184. No agreement was reached between Detective COMICS, INC. and plaintiff SIEGEL as a result of the aforesaid negotiations; however, defendant NATIONAL COMICS PUBLICATIONS, INC. has offered to pay plaintiff SIEGEL for SUPERBOY releases heretofore published, the same rate as he was paid for SUPERMAN magazine releases for which he did not furnish the continuity, i.e., at the rate of $ 200 per release of standard length of thirteen pages.

(Decl. Marc Toberoff, Ex. O at 355-58).

In conjunction therewith, the referee also made the following conclusions of law: “Plaintiff Siegel is the originator and the sole owner of the comic strip feature SUPERBOY, and . . . that the defendants . . . are perpetually enjoined and restrained from creating, publishing, selling or distributing any comic strip material of the nature now and heretofore [**17] sold under the title SUPERBOY. . . . Plaintiff Siegel, as the originator and owner of the comic strip feature SUPERBOY has the sole and exclusive right to create, sell and distribute comic strip material under the title SUPERBOY.” (Id. at 365-66). Thereafter both sides filed an appeal from the referee’s findings of fact and conclusions of law. (Decl. Marc Toberoff, Ex. Q at 379).

While the matter was still on appeal, the parties reached a settlement on May 19, 1948, and signed a stipulation which called for the payment of over $ 94,000 to Siegel and Shuster. In addition, the stipulation provided that the referee’s findings were to be vacated in all respects; reiterated the referee’s earlier determination that Detective Comics owned the rights to Superman; and contained the following proviso concerning the ownership rights to Superboy: “Defendant NATIONAL COMICS PUBLICATION, INC. is the sole and exclusive owner of and has the sole and exclusive right to the use of the title SUPERBOY and to create, publish, sell and distribute and to cause to be created, published, sold and distributed cartoon or other comic strip material containing the character SUPERBOY . . . .” (Decl. Marc Toberoff, [**18] Ex. P at 374).

Two days later, on May 21, 1948, the referee entered a final consent judgment that, among other things, vacated the referee’s findings of fact and conclusions of law entered on April 12, 1948, and expressly acknowledged that Detective Comics is the “sole and exclusive owner of and has the sole and exclusive right to the use of the title SUPERBOY.” (Decl. Marc Toberoff, Ex. Q at 379, 382).

The expiration of the initial copyright term for Superman in the mid-1960s led to another round of litigation between the [*1119] parties. 1 In 1969 Siegel and Shuster filed suit in federal district court in New York seeking a declaration that they, and not Detective Comics’ successor, National Periodical Publications, Inc., were the owners of the copyright renewal rights to Superman. See Siegel v. National Periodical Publications, Inc., 364 F. Supp. 1032 (S.D.N.Y. 1973), aff’d by, 508 F.2d 909 (2nd Cir. 1974). In the process of analyzing their claim, both the federal district court and later the Second Circuit made mention of both the referee’s April, 1948, vacated findings as well as the parties’ May, 1948, final consent judgment. See 364 F. Supp. at 1035; 508 F.2d at 912-13. The courts, however, [**19] diverged as to which of the various court documents coming out of the Westchester action should have binding effect.

FOOTNOTES

1 HN1Under the Copyright Act of 1909 (the “1909 Act”), in effect at the time of Siegel and Shuster’s creation of Superman and later assignment of the same to Detective Comics, an author was entitled to a copyright in his work for twenty-eight years from the date of its publication. See 17 U.S.C. § 24, repealed by Copyright Act of 1976, 17 U.S.C. § 101 et seq. Upon expiration of this initial twenty-eight year term, the author could renew the copyright for a second twenty-eight year period (the “renewal term”).

The district court found both the referee’s vacated findings as well as the final consent judgment to be binding upon it, see 364 F. Supp. at 1035 (“we note that the findings of the State Supreme Court in the Westchester action are binding upon us here. The terms of the stipulation of settlement in that action, and the consent judgment are also binding”), whereas the Second Circuit only made mention of the binding effect that the final consent judgment had on the case. See 508 F.2d at 913 (“There is no doubt that the [May 21, 1948,] judgment of the state court is binding [**20] in this subsequent federal action”). Both courts, however, concluded, in conformity with Supreme Court precedent at the time, see Fred Fisher Music Co. v. M. Witmark & Sons, 318 U.S. 643, 656-59, 63 S. Ct. 773, 87 L. Ed. 1055 (1943) (holding that renewal rights were assignable by an author during the initial copyright term, before the renewal right vested), that, in transferring “all their rights” to Superman to Detective Comics pursuant to the final consent judgment, Siegel and Shuster had assigned not only Superman’s initial copyright term but the renewal term as well, even though those renewal rights had yet to vest when the consent judgment was entered. See 364 F. Supp. at 1037-38; 508 F.2d at 913-14.

Thus ended the tale of the battle over the ownership to the copyrights to Superman and, by extension, Superboy. Or at least that was what everyone believed at the conclusion of the Second Circuit litigation.

With the passage of the Copyright Act of 1976 (the “1976 Act”), Congress changed the legal landscape concerning author’s transfers of their copyrights in their creations. The 1976 Act expanded the duration of the renewal period for existing works already in their renewal term at the time of the Act for an additional [**21] nineteen years, see 17 U.S.C. § 304(b), and, more importantly for this case, gave authors the ability to terminate any prior grants of the rights to their creations that were executed before January 1, 1978, irrespective of the terms contained in such assignments, e.g., that all the rights (the initial and renewal) belonged exclusively to the publisher. Specifically, section 304(c) to the Act provides that, HN2″[i]n the case of any copyright subsisting in either its first or renewal term on January 1, 1978, other than a copyright in a work made for hire, the exclusive or nonexclusive grant of a transfer or license of the renewal copyright or any right under it, executed before January 1, 1978, . . . is subject to [*1120] termination. . . . notwithstanding any agreement to the contrary . . . .”

It is this right to termination that Joanne Siegel, Jerome Siegel’s widow, and Laura Siegel Larson, his daughter, now seek to employ in this case. In November, 2002, they served a notice of termination to defendants 2 directed solely at works featuring Superboy, claiming to undo as of November 17, 2004, any grant provided by Jerome Siegel to defendants’ predecessors in interest contained in the May 19, 1948, [**22] stipulation. 3 The present suit by Joanne Siegel and Laura Siegel Larson seeks a declaration from this Court that the Superboy termination notice is valid and that they have recaptured all of the copyright to Superboy since the effective date of the termination.

FOOTNOTES

2 The defendants consist of Detective Comics’ successor in interest, DC Comics, and DC Comics’ parent company, Time Warner, Inc. , (“Time”), and Time’s subsidiaries, Warner Communications, Inc., Warner Brothers Entertainment, Inc., and Warner Brothers Television Production, Inc. (collectively “defendants”).

3 Plaintiffs have also brought an action, Joanne Siegel, et al. v. Warner Brothers Entertainment, et al., CV-04-8400-SGL (RZx), seeking the Court to declare that they have effectively terminated and recaptured the assignment of the Superman copyrights to defendants that took place by operation of the 1938 agreements executed by Siegel and Shuster with Detective Comics.

This question – the validity of the termination notice – was addressed in a March 24, 2006, Order, by the Honorable Ronald S.W. Lew of this Court, which held: (1) The referee’s findings from the 1948 Westchester action were binding, notwithstanding their vacatur; [**23] (2) the referee’s findings conclusively determined certain unique and exclusive copyright issues, namely, that Siegel’s Superboy submissions were later “published” (as that term is used in copyright law) in Detective Comics’ More Fun Comics # 101, and that the Superboy submissions were neither a “work for hire,” a “derivative work” of Superman, or a “joint work” between Siegel and Shuster; and (3) the termination notice was otherwise valid pursuant to the terms of the 1976 Act and the regulations promulgated thereunder. The end result of the March 24, 2006, Order was that Joanne Siegel and Laura Siegel Larson had recaptured the copyright to Superboy, leaving for trial whether defendants (notably, by producing and broadcasting the successful WB television series Smallville) had infringed Superboy’s copyright since the effective termination date and the scope of accounting for the profits defendants had reaped in exploiting the copyright subsequent to the termination date. Thereafter, defendants’ request to certify the Order for an interlocutory appeal was denied.

On October 30, 2006, the matter was reassigned to the present judicial officer, and defendants promptly sought reconsideration [**24] of the March 24, 2006, Order, and the decision to deny certifying the matter for an interlocutory appeal. For the reasons set forth below, the Court GRANTS defendants’ motion for reconsideration of the March 24, 2006, Order.

The legal questions at stake in the present motion are two-fold:

(1) Whether the referee’s vacated findings from the Westchester action have any binding effect in this case as a matter of judicial or collateral estoppel; 4 and,

[*1121] (2) If they do have a preclusive effect, whether those findings foreclose further consideration of or otherwise impact, certain questions at issue in this case that are unique to copyright law. More to the point, the issue focuses on whether the referee’s findings preclude further litigation on whether, as a matter of copyright law, (a) Siegel’s submissions outlining the idea (and indeed the storyline and dialogue) for Superboy were later “published” in volume 101 of More Fun Comics; (b) the submissions were done under the auspices of a “work for hire”; (c) the submissions are nothing more than a derivative work based upon Superman with no original copyrightable elements contained therein; and (d) Siegel is the sole author of the work or whether [**25] the work is a “joint work” containing Siegel’s storyline and Shuster’s illustrations.

FOOTNOTES

4 Notably, the related doctrine of res judicata (or claim preclusion) has no application in this case given the claim for terminating prior copyright grants contained in the 1976 Act did not exist at the time of the Westchester action. See Marvel Characters, Inc. v. Simon, 310 F.3d 280, 287-88 (2nd Cir. 2002). In Simon, the publisher argued that the co-creator of the late Captain America was barred, as a matter of res judicata, from exercising his termination right under the 1976 Act because, in a settlement agreement reached between the parties during a prior action in New York state court in the 1960s, the co-creator acknowledged his contribution was done as work for hire. According to the publisher, there was “no meaningful distinction between the authorship issue raised in the prior action and the termination right at issue.” Id. at 286. The Second Circuit disposed of the publisher’s argument, commenting that neither “the termination right” contained in the 1976 Act nor the relief requested in the current case (termination of a prior valid grant of a copyright in one’s creation) existed at the time [**26] of the prior state court action. Id. at 287. The court did acknowledge, however, that although res judicata could not bar the co-creator from exercising the claim to terminate rights under the 1976 Act, principles of collateral estoppel (or issue preclusion) may still apply to bar litigation of certain issues that were actually decided in the prior action, including whether the co-creator’s contribution to the comic was done as a work for hire:

Marvel also argues, correctly, that despite the enactment of the 1976 Act, the 1909 Act governs the authorship of the Works at issue here. However, it does not follow, as Marvel suggests, that since the Work’s authorship was at issue in the previous actions, Simon’s termination claim is precluded here. While Simon’s assertion of authorship is the sine qua non of both his prior claim to renewal rights and his present claim to termination rights, it is merely an issue that determines the validity of each claim.

Id. at 288 (emphasis in original).

Ultimately, the Court concludes that, in conformity with the March 24, 2006, Order, the referee’s findings must be given preclusive effect, but as a matter of collateral estoppel rather than judicial estoppel; [**27] however, contrary to the March 24, 2006, Order, those findings are not necessarily determinative of all the issues specified above, but require independent application of the governing body of copyright law to those findings to render a decision about the same.

I. ARE THE REFEREE’S VACATED FINDINGS BINDING AS A MATTER OF JUDICIAL ESTOPPEL?

In the process of passing on the plaintiffs’ motion for partial summary judgment, the Court’s March 24, 2006, Order held that the referee’s vacated findings should be given preclusive effect on account of defendants’ predecessors taking an inconsistent position as to those findings’ binding nature during the 1970s Superman litigation in the Second Circuit:

Defendants’ current argument that Judge Young’s findings are not binding contradicts the position taken by their predecessors in interest in the 1973 litigation and the 1974 Second Circuit appeal regarding Superman. In applying the doctrine of res judicata in favor of defendants, Judge Lasker precluded, and the Second Circuit affirmed, plaintiffs from litigating the issue of ownership of the renewal period of the Superman copyrights.

Having relied on Judge Young’s findings for previous favorable determinations [**28] regarding Superman, defendants now take the inconsistent position that [*1122] this Court is not bound by the state court findings, as they relate to Superboy. Defendants attempt to raise genuine issues of material fact, where the facts were clearly determined by Judge Young after the opportunity to take evidence and hear testimony on that evidence from the parties directly involved in creating this relationship.

Contrary to defendants’ assertions now, both the Southern District of New York and the Second Circuit looked directly to, even citing to, Judge Young’s findings of fact. This Court holds that it is consistent to continue this position and will look to Judge Young’s findings as binding where relevant.

(Decl. Marc Toberoff, Ex. A at 9-10). Although not explicitly using the term, the Court’s March 24, 2006, Order clearly invoked the doctrine of judicial estoppel. The Order specifically pointed to the fact that defendants’ predecessor had sought to utilize the preclusive effect of the referee’s vacated findings in connection with the 1970s Superman litigation and noted that such a position is fundamentally inconsistent with their present position that those same findings have no preclusive [**29] effect with respect to Superboy. Such a concern — HN3preventing parties from seeking to take inconsistent legal positions in subsequent proceedings from those taken in earlier ones — is the hallmark feature of judicial estoppel. See New Hampshire v. Maine, 532 U.S. 742, 749-750, 121 S. Ct. 1808, 149 L. Ed. 2d 968 (2001); Rissetto v. Plumbers & Steamfitters Local 343, 94 F.3d 597, 600 (9th Cir. 1996). As one respected treatise noted, HN4″Judicial estoppel is an equitable concept intended to prevent the perversion of the judicial process. It is to be applied where intentional self-contradiction is being used as a means of obtaining unfair advantage.” 18 JAMES WM. MOORE, MOORE’S FEDERAL PRACTICE § 134.30 at 134-63 to 134-64 (3rd ed. 2006) (internal quotation marks and citations omitted).

That the doctrine is equitable in nature does not mean its application is unlimited. HN5The Supreme Court has set out three questions to guide a court’s decision whether to apply the doctrine in a given case: (1) Is the party’s later position clearly inconsistent with its earlier position?; (2) Did the party succeed in persuading a court to accept its earlier position?; and (3) Would the party derive an unfair advantage or impose an unfair detriment [**30] on the opposing party were the court to allow it to pursue its now inconsistent position? New Hampshire, 532 U.S. at 750-51.

Applying this test here, the Court readily finds that defendants’ present position is clearly inconsistent with the one taken in the 1970s Superman litigation. Defendants unquestionably sought to have the federal courts in that litigation bar Siegel and Shuster’s claim to the renewal rights to the Superman copyright by reference, in part, to the referee’s vacated findings. Now they argue that those very findings have no preclusive effect. The first factor, therefore, weighs in favor of application of judicial estoppel.

The second factor, whether defendants succeeded in having those courts accept their position, is more problematic. Although at least one of those courts did conclude that the referee’s vacated findings were binding, see 364 F. Supp. at 1035; the difficulty lies in the fact that this particular legal point was not material to the outcome in the case. Given that the referee’s vacated findings and the parties’ final consent judgment were consistent with one another as to the ownership of Superman, the federal courts during the 1970s Superman litigation [**31] were not called upon to take a position, one way or the other, over the legally binding nature of the referee’s vacated [*1123] findings separate and apart from the parties’ final consent judgment. Both the findings and the consent judgment supported those courts’ decisions that defendants were the owners of the renewal term to the Superman copyright.

Here, in contrast, the separate legally binding nature of the referee’s vacated findings is very much in dispute because those findings are in direct conflict with the parties’ final consent judgment over the ownership rights to Superboy. In light of the fact that the federal courts in the earlier Superman litigation did not have to accept (and one in fact did not accept) defendants’ earlier inconsistent position in order to rule in defendants’ favor in the manner in which they did, it is hard to fathom how allowing defendants to now take a contrary position in this litigation somehow operates to create the perception that either of the courts deciding the 1970s Superman litigation, or this Court for that matter, have been misled through defendants inconsistent positions. See New Hampshire, 532 U.S. at 750 (noting that result sought to be avoided [**32] by second factor is the creation of “the perception that either the first or the second court was misled”). As one court explained:

HN6[J]udicial estoppel is an “extraordinary remed[y] to be invoked when a party’s inconsistent behavior will otherwise result in a miscarriage of justice.” It is not meant to be a technical defense for litigants seeking to derail potentially meritorious claims, especially when the alleged inconsistency is insignificant at best and there is no evidence of intent to manipulate or mislead the courts. Judicial estoppel is not a sword to be wielded by adversaries unless such tactics are necessary to “secure substantial equity.”

Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355, 365 (3rd Cir. 1996).

The third factor weighs against application of judicial estoppel for much the same reason. No miscarriage of justice or substantial inequity would take place from allowing defendants to now take a position inconsistent with that taken during the 1970s Superman litigation precisely because the prior contrary position was itself immaterial to the outcome in those prior proceedings. See New Hampshire, 532 U.S. at 750-51 HN7(“Absent success in a prior proceeding, [**33] a party’s later inconsistent position introduces no ‘risk of inconsistent court determinations’ and thus poses little threat to judicial integrity”). No matter how the federal courts in the Superman litigation parsed the matter, be it pursuant to the referee’s vacated findings, the parties’ final consent judgment, or both, the conclusion reached would be the same: Defendants were the owners to the renewal term to the Superman copyright. It is not inequitable to allow defendants to now take a position inconsistent with one taken in a prior litigation if the conclusion reached in that prior litigation would have been the same regardless of the defendants’ advocated position.

HN8Judicial estoppel is guided by pragmatic considerations geared towards “the facts of the particular dispute in mind”; it is not meant as “a set of hard and fast rules that might be circumvented by a clever litigant, on the one hand, or serve as a trap for an unwary litigant, on the other.” 18 JAMES WM. MOORE, MOORE’S FEDERAL PRACTICE § 134.31 at 134-72 (3rd ed. 2006). Just because defendants took an inconsistent position in the past on a point that was not material to the outcome of that litigation does not mean they [**34] are bound to that position forevermore. Accordingly, the Court finds the March 24, 2006, Order’s reliance on the doctrine of judicial estoppel is misplaced.

[*1124] II. ARE THE REFEREE’S VACATED FINDINGS BINDING AS A MATTER OF COLLATERAL ESTOPPEL?

This leaves whether the referee’s vacated findings are binding through operation of collateral estoppel.

HN9Federal courts must give a state court judgment the same preclusive effect as would be given to that judgment “under the law of the State in which the judgment was rendered.” Migra v. Warren City Sch. Dist. Bd. of Ed., 465 U.S. 75, 81, 104 S. Ct. 892, 79 L. Ed. 2d 56 (1984); see also Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 380, 105 S. Ct. 1327, 84 L. Ed. 2d 274 (1985) (“a federal court should determine the preclusive effect of a [earlier] state court judgment [through reference] to the law of the State in which judgment was rendered”); Pension Trust Fund v. Triple A Mach. Shop, 942 F.2d 1457, 1460 (9th Cir. 1991) (examining California law for purposes of determining res judicata effect of an earlier California state court judgment). Thus, in determining the preclusive effect of the vacated findings from the 1948 Westchester action, the Court must look to New York law.

HN10Under New York law, [**35] collateral estoppel applies when (1) the identical issue was raised in a previous proceeding; (2) the issue was actually litigated and decided in the previous proceeding; (3) the party had a full and fair opportunity to litigate the issue; and (4) the resolution of the issue was necessary to support a valid and final judgment on the merits. See Mercantile & General Reinsurance Co. v. Colonial Assurance Co., 147 Misc.2d 804, 805-806, 556 N.Y.S.2d 183 (N.Y. Sup. Ct. 1989) (“Collateral estoppel . . . requires that there have been a final, binding determination in a prior action in which there was a full and fair opportunity to litigate the issue involved”); see also Marvel, 310 F.3d at 288-89 (setting forth the above elements for collateral estoppel under New York law). HN11The result achieved through invocation of collateral estoppel is to prevent parties or their privies, such as defendants in this case, from re-litigating in a subsequent action an issue of fact or law that was fully and fairly litigated in a prior proceeding.

Defendants position on this point is fairly straightforward: The referee’s findings were vacated by the parties’ May, 19, 1948, stipulation and the subsequent entry of the final consent [**36] judgment; with this vacatur, so too lapsed the binding effect of the referee’s findings because no final judgment was left in place to enforce. Defendants correctly note that, under New York law, a judgment that has been vacated loses its preclusive effect. See Ruben v. American and Foreign Ins. Co., 185 A.D.2d 63, 592 N.Y.S.2d 167, 169 (N.Y. App. Div. 1992) (“Because the judgment was vacated, the jury verdict lacks finality and cannot be given collateral estoppel effect”); Church v. New York State Thruway Authority, 16 A.D.3d 808, 791 N.Y.S.2d 676, 679 (N.Y. App. Div. 2005) (“when the judgment is subsequently vacated, collateral estoppel is inapplicable”); see also Universal City Studios, Inc. v. Nintendo Co., 578 F. Supp. 911, 919 (S.D.N.Y. 1983) (“A judgment that has been vacated, reversed, or set aside on appeal is thereby deprived of all conclusive effect, both as res judicata and as collateral estoppel”).

That said, courts outside of New York have recognized an exception to this rule and have given preclusive effect to vacated judgments if those judgments were the product of a trial and there is a significant lapse of time between the proceedings. See Aetna Cas. & Surety Co. v. Jeppesen & Co., 440 F. Supp. 394, 405 (D. Nev. 1977); [**37] Angstrohm Precision, Inc. v. Vishay [*1125] Intertechnology, Inc., 567 F. Supp. 537, 541 (E.D.N.Y. 1982) (construing Virginia law); see also Ringsby Truck Lines v. Western Conference of Teamsters, 686 F.2d 720, 722 (9th Cir. 1982) (noting that the answer to whether to give preclusive effect to a trial court’s judgment after the parties settle the case while the matter is on appeal “may be different in different cases as equities and hardships vary the balance between the competing values of right to relitigate and finality of judgment” citing RESTATEMENT (SECOND) OF JUDGMENTS § 28 (1982)).

There appears to be no authority conclusively determining whether such an exception exists under New York law. In one New York state case, Mercantile & General Reinsurance Co. v. Colonial Assurance Co., 147 Misc.2d 804, 556 N.Y.S.2d 183 (N.Y. Sup. Ct. 1989), the court did, however, make mention of the possibility of giving such preclusive effect to vacated judgments in circumstances not all that different from those in this case.

Then Justice (now federal district court judge) Harold Baer, Jr., issued a comprehensive ruling examining the very question now in dispute in this case. In Mercantile, a reinsurer sought a declaratory [**38] judgment that it was not bound to provide reinsurance with respect to certain insurance policies. Id. at 805. The reinsurer’s obligations had been previously litigated in a prior New York state court action involving the same insurance and reinsurance contracts, which resulted in the grant of partial summary judgment against it. Id. While the matter was on appeal the parties settled. Id. As an element of the settlement, the trial court issued an order vacating the judgment and sealing the record. Id.

The question before Justice Baer was whether the vacated judgment from the prior action collaterally estopped the reinsurer from seeking to relitigate those issues in the case before him. He began his analysis by noting the general rule that “a judgment that has been vacated will not provide a basis for collateral estoppel.” Id. at 806. The court then noted that some courts outside of New York, while recognizing this general rule, had recognized that it may not “apply when the vacatur has occurred after ‘the expenditure of the court’s resources in a jury trial.'” Id. at 807. Although the expenditure of such judicial resources had not occurred in the case before him, Justice Baer nonetheless [**39] chose to address the question, explaining that it appeared to be one of “first impression” under New York law. Id.

In examining this question Justice Baer recognized that competing considerations affected the analysis. On the one hand, HN12weighing in favor of continuing to afford preclusive effect to the vacated judgment, was the public’s interest in the conservation of judicial resources. The more “resources of a hard-pressed judicial system [are] expended in resolving a matter,” the more significant this factor becomes in preserving the results generated by that system. Id. at 808.

On the other hand, weighing against giving preclusive effect to a vacated judgment, is not only the private interest expressed by the parties themselves not to be bound by that judgment, but the court’s similar conclusion in the prior action as well. As Justice Baer observed, “[h]ad the judge wished to allow preclusion, he could have dismissed [the case] rather than vacat[ing the findings as well].” Id. at 808. Additionally, there is the public interest in facilitating settlement by the parties, an interest which would be undermined if the effects of such settlement (notably, the agreement to vacate earlier [**40] court orders) was negated. Id. at 809 (“There M&G [*1126] gave up its appeal on the basis of the settlement. It did so in reasonable reliance on the basic principle that a vacated judgment is of no effect”). The negative result of undermining the ability of parties to effectively settle their disputes would also spill over into parties litigating every possible issue in any “case in which there was any chance of a later suit.”

Every move possible and every countermove imaginable would become imperative. Every appealable ruling would have to be appealed. The system–and therefore the public interest–would suffer from this increase in the volume and ferocity of litigation. Id. at 809.

In the end, Justice Baer returned to where he began his analysis, finding that none of the “exceptional circumstances” that may weigh in favor of giving preclusive effect to a vacated judgment existed in the case before him. The expenditure of judicial resources in the prior action was limited, as the prior judgment was entered as a result of a partial summary judgment motion, not a trial. Id. at 809-810. Moreover, given the relatively short gap in time between the two proceedings, critical evidence (be it testimonial [**41] or documentary) still remained available. Id. For these reasons Justice Baer left it for another occasion whether to “carve out an exception to the rule that the vacatur of a judgment is not a meaningless act for the purposes of issue preclusion.” Id. at 809.

Despite defendants’ protestations to the contrary, Justice Baer did not find that under no set of circumstances could the general rule against affording preclusive effect to vacated judgments give way. Justice Baer expressly left open the possibility that an exception may exist where certain circumstances were present. Id. at 810. The Mercantile court’s decision not to categorically foreclose application of collateral estoppel to vacated judgments is consistent with the recognition in New York law that HN13application of collateral estoppel is not a rigid and inflexible concept, but one which produces varied results in different cases based on how particular circumstances in those case tilt the equities and/or hardships. See Juan C. v. Cortines, 89 N.Y.2d 659, 667, 679 N.E.2d 1061, 657 N.Y.S.2d 581 (1997) (describing collateral estoppel as a “equitable doctrine” that is “grounded on concepts of fairness and should not be rigidly or mechanically applied”). Such recognition [**42] is reflected by a long line of New York cases citing approvingly to section 28 of the Restatement (Second) of Judgments which allows courts to avoid applying the collateral estoppel doctrine when otherwise warranted if special circumstances exist. 5 This is the very section that the Ninth Circuit in Ringsby described as epitomizing the principal under collateral estoppel that the “answer may be different in different cases as equities and hardships vary the balance between the competing values of right to relitigate and finality of judgment.” 686 F.2d at 722. Thus, after Mercantile, there remains the possibility that a vacated judgment could be afforded preclusive effect if exceptional circumstances are present to warrant it. See Mercantile, 147 Misc.2d at 810 (observing that whether such an exception should apply in a future case “may well require consideration of factors that the parties have not [*1127] briefed or discussed and that might necessitate reflection not available to me as this trial approaches” (citing Ringsby)).

FOOTNOTES

5 See Hodes v. Axelrod, 70 N.Y.2d 364, 515 N.E.2d 612, 520 N.Y.S.2d 933 (1987); Juan C. v. Cortines, 89 N.Y.2d 659, 679 N.E.2d 1061, 657 N.Y.S.2d 581 (1997); Augustine v. Sugrue, 8 A.D.3d 517, 779 N.Y.S.2d 515 (2004); People v. Roselle, 193 A.D.2d 56, 602 N.Y.S.2d 50 (1993); [**43] Goldstein v. Consolidated Edison Co. of New York, Inc., 93 A.D.2d 589, 462 N.Y.S.2d 646 (1983).

The exceptional circumstances noted in Mercantile are present here. Mercantile approvingly noted the district court decisions in Aetna and Angstrohm as worthy exemplars of when application of such an exception is warranted. In both cases, a judgment was entered after a trial, the judgment was later vacated by the court after the parties reached a settlement, and, at least in Aetna, a significant period of time (more than eight years) then passed before a separate proceeding was instituted where the preclusive effect of the earlier vacated judgment became an issue. Here, the vacated referee’s findings were made following a trial that was conducted more than sixty years ago; all of the material witnesses to the transactions in question are now deceased; and some of the documents from that time are now lost. These facts fundamentally alter the balance of interests observed in Mercantile.

Failure to give preclusive effect to the referee’s vacated findings here would seriously compromise the conservation and efficient use of judicial resources. The referee’s findings were tendered after that court’s expenditure [**44] of numerous resources in conducting a trial, listening to testimony, parsing over the record, and then rendering a judgment. All of those hard-pressed resources will simply be squandered were the Court not to afford those findings preclusive effect. This by itself, however, would probably not be enough to give preclusive effect to the referee’s findings. See Ruben, 592 N.Y.S.2d at 171 (refusing to afford collateral estoppel effect to a vacated judgment that had been tendered following a trial and a verdict returned by a jury). But there is more: Absent reliance on the referee’s vacated findings, the lengthy passage of time since the trial and decision would seriously threaten the reliability of any judgment handed down in the present case. To believe that the factual issues actually litigated before the referee in the 1947 Westchester action could be relitigated in the present proceeding without a significant degradation of the reliability of the conclusions reached in this proceeding would give this Court and the parties’ counsel too much credit. Here, all the Court has is some, but not all, the documents from the relevant period; additionally, there are no witnesses who could testify [**45] to give life and context to those documents still in existence. Some of the copyright questions under examination in this proceeding will require much more understanding than a partial paper trial could provide. Understanding the meaning of a document is oftentimes the product of much more than simply looking at its words; live witness testimony provides color, understanding, and context of the document’s existence and meaning. The only court with the opportunity to assess the credibility of such live testimony in connection with this legal dispute was presided over by the referee in the Westchester action. To refuse to afford the findings the referee made after consulting all the documents, and hearing all the live testimony on the topic would to be to deprive the record of the permutations, nuances, and subtleties those witnesses’ recollections placed on the meaning of those documents now brought before this Court to examine. If the eight-year gap in Aetna was sufficient to warrant a finding that exceptional circumstances existed to give preclusive effect to a vacated judgment due to the “dimmed” memories of those witnesses who could still be found and the loss of documents that [**46] occurred in the interim, 440 F. Supp. at 405, a sixty-year gap certainly suffices.

All that defendants can point to in rebuttal is that the parties bargained for wiping the evidentiary slate clear, replacing [*1128] it with their settlement agreement and the final consent judgment. Admittedly, this fact does weigh against giving preclusive effect to the referee’s findings, but the significance of the parties’ expectations is diminished by the particular concerns implicated in this case. To fail to give preclusive effect to the referee’s findings in a case with such a lengthy gap between proceedings may very well make it extremely difficult, if not impossible, to create any reliable findings in the present litigation over plaintiffs’ attempt to terminate the grants conferred to defendants shortly after those referee’s findings were made. See Aetna, 440 F. Supp. at 405. Focusing solely on the parties’ expressed intent as the lodestar for deciding whether collateral estoppel applies or not in this case would be to place the thumb too heavily on the side of the scale against preclusion without sufficiently taking account of the serious concerns that have arisen weighing in favor of preclusion due [**47] to the passage of time since the Westchester action took place.

This leads to another significant issue: The scope of the parties’ private interest. Although it is undoubtedly true that the parties sought to avoid giving the referee’s vacated findings preclusive effect, it must be remembered the context in which that private interest was expressed. The parties’ sought to bar the further relitigation of claims relating to the scope of the grant itself to Superman’s and Superboy’s copyright (the ownership question); the stipulation and consent judgment served to end further debate on that point. 6 See Siegel, 508 F.2d at 913 (noting that effect of parties’ stipulation and final consent judgment was to “finally determine[] that Detective . . . owned all rights to Superman without limitation”). Neither side, however, had any inkling of the existence of the current copyright claim at issue in this case — namely, the 1976 Act’s creation of the right to terminate grants to copyrights. Reference to the private parties’ interest as a means to defeat giving preclusive effect to the referee’s vacated findings in this case, therefore, would be to stretch the parties’ intentions to cover the litigation [**48] of issues in a cause of action (the termination of ownership) they themselves had no idea would exist or that they even sought to safeguard against. Cf. Marvel, 310 F.3d at 288 (refusing to afford res judicata to parties’ earlier pre-1976 Act settlement agreement concerning nature of grant of copyright in subsequent suit seeking to litigate termination of that grant).

FOOTNOTES

6 The parties’ consent judgment would not have estopped further litigation of the issues related to the ownership question, such as work for hire status, etc., because neither the consent judgment nor the stipulation contain any findings with respect to those issues; instead, the consent judgment simply declares that Detective Comics was the sole and exclusive owner of Superman and Superboy, and leaves it at that. See Marvel, 310 F.3d at 289 (“where a stipulation of settlement is ‘unaccompanied by findings,’ it does ‘not bind the parties on any issue . . . which might arise in connection with another cause of action. Here, although the Settlement Agreement contained detailed findings on the authorship issue, neither of the stipulations filed in the Prior Actions contain any specific findings as to whether Simon authored [**49] the Works independently or whether the Captain America character was created as a work for hire. Nor do the stipulations reference the Settlement Agreement in any way. Therefore, the stipulations do not collaterally estop Simon from litigating the issue of authorship underlying his termination claim in this action”).

Undoubtedly some of the factual questions considered in the present effort to terminate the grant of rights to the Superboy copyright will touch upon the same facts as litigated in the state action over ownership to that same copyright. Nonetheless, the point remains that those issues are brought in the context of a legal right that was not conferred until decades later [*1129] in the 1976 Act. Without giving preclusive effect to the referee’s vacated findings in this case, the right Congress sought to give to artists and their heirs would be seriously (if not, fatally) undermined simply through the passage of time, leaving in its wake nothing but a partial documentary record, uncolored or given context by live testimony, concerning factual questions critical in exercising that right to terminate prior grants. Again, there are no detailed findings contained in the parties’ stipulation [**50] or final consent judgment to which the Court could otherwise defer, leaving the evidentiary slate clean in this case save for the referee’s vacated findings.

Indeed, the concern with the passage of time is invariably present with the exercise of the termination rights conferred by the 1976 Act; through passage of section 304 Congress effectively resurrected ownership to copyrights that had otherwise long ago been thought to belong to the publisher since the Supreme Court’s 1943 decision in Fred Fisher Music. Here, concerns with the effectiveness of the 1976 Act termination remedy are alleviated to some extent with the presence of the referee’s vacated findings. Those findings essentially encapsulate the perception and recollection of the key participants to many of the factual questions now at issue in this case. This point is important to keep in mind as it further diminishes the weight of the interest against giving preclusive effect to the referee’s findings.

When the private interest of the parties from the Westchester action is compared to the substantial concerns weighing in favor of continuing to give preclusive effect to the referee’s vacated findings — preventing the loss of [**51] the considerable judicial resources expended in the Westchester action that will otherwise not be effectively replicated in the present proceeding with as much assurance as the prior proceeding due to the loss of critical witnesses and documents over the ensuing sixty year period — it is clear to this Court that exceptional circumstances exist to give continuing preclusive effect to the referee’s findings despite their later vacatur.

II