Matsco, Inc. and Matsco Financial Corporation (Matsco) (plaintiff) had a security interest in a patent developed by Cybernetic Services, Inc. (Cybernetic) (defendant). Matsco recorded the security interest by filing a financing statement with the California Secretary of State. Subsequently, Cybernetic’s creditors filed an involuntary petition for bankruptcy against Cybernetic, which was granted. Matsco filed a motion in the bankruptcy court, seeking relief from the automatic stay in order to foreclose on its security interest. The bankruptcy trustee responded by arguing that the security interest was not perfected, because Matsco did not record the security interest in the United States Patent and Trademark Office (PTO). The bankruptcy court granted Matsco’s motion. The bankruptcy trustee appealed to the Bankruptcy Appellate Panel, which affirmed the bankruptcy court’s ruling. The bankruptcy trustee then appealed to the United States Court of Appeals for the Ninth Circuit.