rac-tech [http://community.jboss.org/people/rac-tech] created the discussion

"Re: javax.naming.NameNotFoundException: persistence not bound"

To view the discussion, visit: http://community.jboss.org/message/583752#583752

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This issue has been fixed and I'm publishing what was done in case this could 
help someone else out there.

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I found out that this error is a misleading error due to a jndi name used. The 
JNDI name used for "jboss.entity.manager.factory.jndi.name"(declared in 
persistence.xml)  was in the pattern "java:/persistence/abc" Although the error 
message "Persistence not bound" it should have been "persistence/abc not 
bound". It could be some error of the error message generation.

So the actual error was jboss.entity.manager.factory.jndi.name(declared in 
persistence.xml) is not bound. I noticed that this JNDI lookup is done(by 
EhCache) at the start up time just before binding this persistence unit JNDI 
name.

Solution
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After adding the following property to persistence.xml(inside <properties> ) 
and applying JBoss patches the error went away.

<property name="hibernate.transaction.factory_class" 
value="org.hibernate.ejb.transaction.JoinableCMTTransactionFactory"/>
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