Aerocon Engineering, Inc. v. Silicon Valley Bank (In re World Auxiliary Power Co.)

In this case we decide whether federal or state law governs priority of security interests in unregistered copyrights.

FACTS

Basically, this is a bankruptcy contest over unregistered copyrights between a bank that got a security interest in the copyrights from the owners and perfected *1123 it under state law, and a company that bought the copyrights from the bankruptcy trustees after the copyright owners went bankrupt. These simple facts are all that matters to the outcome of this case, although the details are complex.

Three affiliated California corporations — World Auxiliary Power, World Aer-otechnology, and Air Refrigeration Systems — designed and sold products for modifying airplanes. The FAA must approve modifications of civilian aircraft by issuing “Supplemental Type Certificates.” 1 The three companies owned copyrights in the drawings, technical manuals, blueprints, and computer software used to make the modifications. Some of these copyrighted materials were attached to the Supplemental Type Certificates. The companies did not register their copyrights with the United States Copyright Office.

The companies got financing from Silicon Valley Bank, one of the…