## Facts

- Capitol Federal Savings & Loan Association of Denver extended a $6 million line of credit to the debtor’s predecessor, taking a security interest in a film library and related rights.
- The collateral description covered films and related “accounts, contract rights, chattel paper, general intangibles, instruments, equipment, and documents” tied to the film inventory.
- Capitol Federal filed UCC-1 financing statements in California, Colorado, and Utah.
- Capitol Federal did not record its security interest in the United States Copyright Office.
- National Peregrine, Inc. filed a voluntary Chapter 11 petition and acted as debtor in possession; its principal assets included copyrights, distribution rights/licenses for about 145 films, and licensing receivables.
- The debtor in possession brought an adversary proceeding to avoid the lender’s lien under 11 U.S.C. § 544(a), arguing the security interest in copyrights and certain licenses was unperfected absent Copyright Office recordation.
- The bankruptcy court granted summary judgment for the lender, concluding state UCC filings perfected the security interest.
- The debtor in possession appealed to the district court.

## Issues

1. Whether perfection of a security interest in a copyright (and other “transfers of copyright ownership”) requires recordation in the U.S. Copyright Office under the Copyright Act rather than state UCC filing.
2. Whether the Copyright Act’s recording provisions preempt state-law methods of perfection for registered copyrights and ownership-type interests.
3. How the perfection rule applies across different categories of collateral in a film library (copyright ownership, exclusive licenses, nonexclusive licenses, and related receivables/contract rights).

## Decision

- The district court held that the Copyright Act provides the governing perfection method for security interests that constitute “transfers of copyright ownership,” including mortgages or hypothecations of copyrights.
- The court concluded that, for such copyright interests (particularly registered copyrights), state UCC filing alone does not perfect the security interest; recordation in the Copyright Office is required.
- The court recognized that some collateral associated with the film library (such as certain receivables or contract rights) may remain governed by state UCC perfection rules.
- The court remanded to the bankruptcy court for further proceedings to apply the federal perfection framework to the specific asset categories in the record.

## Legal Principles

- A security interest that qualifies as a “transfer of copyright ownership” is governed by the Copyright Act’s national recording system, and federal law displaces inconsistent state perfection rules.
- For registered copyrights and ownership-type interests covered by the Act’s transfer/recording provisions, perfection requires recordation in the U.S. Copyright Office; state UCC-1 filings are insufficient for those interests.
- Asset characterization matters: exclusive licenses and ownership interests may fall within federal recording requirements, while other collateral (e.g., receivables and some contract rights) may be perfected under state UCC law.
- In bankruptcy, a debtor in possession may avoid unperfected security interests under 11 U.S.C. § 544(a), making proper perfection method outcome-determinative for lien priority.

## Conclusion

The district court determined that federal copyright recording rules control perfection of security interests in registered copyrights and other ownership-type copyright interests, rendering state UCC filing alone inadequate for those interests, and remanded for application of that rule to the debtor’s film-library assets and related collateral.


In re Peregrine Ent. Ltd., 116 B.R. 194 (C.D. Cal. 1990)