In re Cybernetic Services, Inc. (Petitioning Creditors v. Matsco, Inc.) (9th Cir. 2001)

In re Cybernetic Services, Inc. (2001)

Citation: 252 F.3d 1039 · Court: U.S. Court of Appeals for the Ninth Circuit · Decided: June 6, 2001 · Opinion: Graber, Circuit Judge.

Source note (2026-10-18):

• Links on this page to https://static.case.law/f3d/252/cases/1039-01.json are an (unofficial Caselaw Access Project copy, retrieved before 2026-10-18; host disallows automated access); no official or otherwise permitted full-text copy was located on 2026-10-18.

Case page. Legal information, not legal advice. Last verified: 2026-10-16.

Facts

A lender held a security interest in a debtor’s patent, perfected by filing UCC-1 financing statements under California’s Article 9, but did not record the interest at the PTO. In the debtor’s bankruptcy, the trustee — with the status of a hypothetical lien creditor — argued that 35 U.S.C. § 261 required PTO recording to perfect against a later lien creditor. (Source: https://static.case.law/f3d/252/cases/1039-01.json , retrieved 2026-10-16.)

Holding

For the trustee to prevail, “(1) Petitioners’ transaction with Debtor must have been the type of ‘assignment, grant or conveyance’ referred to in § 261, and (2) the Trustee, who has the status of a hypothetical lien creditor, must be a ‘subsequent purchaser or mortgagee.’ We hold that neither condition is met.” “The Patent Act does not require parties to record documents in order to provide constructive notice to subsequent lien creditors who do not hold title to the patent.”

Practical impact

Lien searches on patents must include the UCC records of the owner’s location, not only the PTO assignment database. A buyer at a forced sale who relies only on the PTO record may miss a perfected security interest. Section 261’s recording rule still governs priority between purchasers and mortgagees of the patent title.

Good-law status

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Applies in →

intellectual-property-and-licenses, ucc-article-9-sales-of-a-business

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Legal information, not legal advice. Verify against the current primary source before relying on this summary.