Thompkins v. Lil’ Joe Records, Inc.

In May 1989, Luther Campbell (debtor) signed Jeffrey Thompkins (plaintiff) to a recording agreement with Campbell’s recording company, Luke Records, Inc. (debtor). The agreement provided that for five years, Thompkins would record albums under the name Poison Clan for production and release by Luke Records. Luke Records received copyrights to the sound recordings and agreed to pay Thompkins royalties on all future sales of the records. Between 1989 and 1994, Thompkins, as Poison Clan, recorded three albums that Luke Records distributed. In March 1995, Luke Records’ creditors filed an involuntary Chapter 7 bankruptcy petition against Luke Records. Campbell subsequently filed a voluntary Chapter 11 bankruptcy petition and asked that Luke Records’ Chapter 7 case be converted to a Chapter 11 case. The bankruptcy court agreed and jointly administered the Chapter 11 bankruptcies. The bankruptcy court eventually confirmed a joint reorganization plan and ordered the rejection of all of Campbell’s and Luke Records’ executory (i.e., unperformed) contracts and unexpired leases. As the final step in the reorganization, Luke Records and Campbell assigned all their copyrights to Lil’ Joe Records, Inc. (Lil’ Joe) (defendant). In March 2002, Thompkins sued Lil’ Joe and other entities for copyright infringement based on Lil’ Joe’s alleged exploitation of copyrights allegedly owned by Thompkins in the songs he recorded as Poison Clan. Thompkins asserted that when Luke Records rejected its executory contracts, any copyrights granted to Luke Records under the 1989 agreement had reverted to Thompkins. According to Thompkins, the reversion meant that the copyrights were no longer part of the bankruptcy estate and were not transferred to Lil’ Joe. Lil’ Joe moved for summary judgment, asserting that the rejection of the contracts did not affect ownership of the copyrights by Luke Records’ bankruptcy estate and that the copyrights were transferred to Lil’ Joe during the reorganization. The district court granted summary judgment for Lil’ Joe, and Thompkins appealed.