## Facts

- Pasteurized Eggs Corporation (PEC) acquired patents and trademarks for “ThermalPure™ Technology” under a January 2, 1997 Patent Purchase Agreement (PPA) with Bon Dente Joint Venture (BDJV) (as successor to prior IP holders).
- The PPA granted BDJV a right to receive future payments and included provisions under which the technology could revert to BDJV upon specified conditions.
- BDJV recorded the PPA (or related documents) with the U.S. Patent and Trademark Office (PTO) and asserted that this recording perfected its security interest in the patents and trademarks.
- In January 2001, predecessor entities were merged into PEC.
- In September 2001, PEC and BDJV negotiated a “Master Agreement” addressing the technology and related rights; PEC contended it never became effective.
- PEC filed a Chapter 11 petition in 2002 and initiated an adversary proceeding seeking declaratory judgments concerning ownership of the technology, the status and perfection of BDJV’s interest, avoidance of any unperfected security interest, treatment of BDJV’s payment rights, and whether a reversion or effective Master Agreement existed as of the petition date.
- PEC moved for partial summary judgment on whether the technology was estate property, whether BDJV had a perfected security interest, and whether BDJV’s payment rights were a prepetition unsecured claim.

## Issues

1. Whether the ThermalPure™ patents and trademarks were property of the bankruptcy estate under 11 U.S.C. § 541.
2. Whether BDJV perfected any security interest in the patents and trademarks by recording in the PTO, or whether perfection required compliance with state UCC Article 9 filing rules.
3. Whether any unperfected security interest held by BDJV was avoidable by the debtor-in-possession under 11 U.S.C. § 544.
4. Whether BDJV’s right to future payments under the PPA was a prepetition general unsecured claim.
5. Whether, as of the petition date, the technology had reverted to BDJV under the PPA or the 2001 Master Agreement had become effective.

## Decision

- The court ruled that the ThermalPure™ patents and trademarks were property of PEC’s bankruptcy estate under § 541.
- The court held that PTO recordation did not, by itself, perfect BDJV’s security interest in the patents and trademarks.
- The court held that any unperfected security interest was avoidable under § 544 by the debtor-in-possession.
- The court determined BDJV’s right to future payments under the PPA constituted a prepetition general unsecured claim.
- The court declared that, as of the petition date, no reversion of the technology to BDJV had occurred under the PPA and the 2001 Master Agreement had not become effective.

## Legal Principles

- Property of the estate under 11 U.S.C. § 541 includes the debtor’s legal and equitable interests in patents and trademarks as of the petition date, absent a completed transfer removing those interests prepetition.
- Perfection and priority of a security interest in patents and related IP, as against a bankruptcy estate and creditors, generally requires compliance with state UCC Article 9 filing requirements; PTO recordation is not a substitute for UCC perfection.
- Under 11 U.S.C. § 544(a), a debtor-in-possession may avoid a creditor’s unperfected security interest as of the petition date.
- Rights to future payments arising from a prepetition agreement are treated as prepetition claims absent a perfected lien or another basis for secured or administrative status.
- Contractual reversion provisions affecting estate property are evaluated as of the petition date; where the triggering conditions have not produced a completed reversion prepetition, the estate retains the debtor’s interest.

## Conclusion

The court concluded that PEC owned the ThermalPure™ patents and trademarks as estate property and that BDJV’s reliance on PTO recordation did not perfect any security interest, rendering any such interest avoidable under § 544 and leaving BDJV with a prepetition general unsecured claim for future payments, without any prepetition reversion or effective modification shifting ownership back to BDJV.


Pasteurized Eggs Corp. v. Bon Dente Joint Venture (In re Pasteurized Eggs Corp.), 296 B.R. 283 (Bankr. D.N.H. 2003)