TD Ameritrade v. Matthews
Filing
238
ORDER granting 196 Motion for Summary Judgment; denying 228 Motion to File Surreply; denying as moot 193 Motion for Summary Judgment, 194 Motion to Exclude Testimony, and 197 Motion for Summary Judgment; denying as moot 227 Motion for Leave to File and 229 Motion to File Surreply. Signed by Judge Sharon L. Gleason on 8/25/21. (JLH, COURT STAFF)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
TD AMERITRADE, INC., et al.,
Plaintiffs,
v.
Case No. 3:16-cv-00136-SLG
JAMES RICHARD MATTHEWS,
Defendant.
ORDER RE MOTION FOR SUMMARY JUDGMENT ON MATTHEWS’
COUNTERCLAIMS
Before the Court at Docket 196 is Plaintiffs TD Ameritrade, Inc., TD
Ameritrade Holding Corporation, TD Ameritrade IP Company, Inc., and TD
Ameritrade Services Company, Inc.’s (collectively, “TD Ameritrade”) Motion for
Summary Judgment in Favor of TD Ameritrade on Matthews’ Counterclaims
Because He Does Not Own the Asserted Copyright. Defendant James Matthews
responded at Docket 211, to which TD Ameritrade replied at Docket 223. Mr.
Matthews filed a request to file a surreply at Docket 228, which TD Ameritrade
opposed at Docket 231. Oral argument was not requested and was not
necessary to the Court’s determination. The underlying facts of this case are set
forth in the Court’s orders on TD Ameritrade’s first, second, and third motions to
dismiss; the Court assumes the parties’ familiarity with them and they are not
repeated here.1
LEGAL STANDARD
Federal Rule of Civil Procedure 56(a) directs a court to “grant summary
judgment if the movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” The burden of
showing the absence of a genuine dispute of material fact lies with the moving
party.2 If the moving party meets this burden, the non-moving party must present
specific factual evidence demonstrating the existence of a genuine issue of fact. 3
The non-moving party may not rely on mere allegations or denials.4 Rather, that
party must demonstrate that enough evidence supports the alleged factual dispute
to require a finder of fact to make a determination at trial between the parties’
differing versions of the truth.5
When considering a motion for summary judgment, a court views the facts
in the light most favorable to the non-moving party and draws “all justifiable
inferences” in the non-moving party’s favor.6 To reach the level of a genuine
dispute, the evidence must be such “that a reasonable jury could return a verdict
1
See Docket 62 (Order re Motion to Dismiss); Docket 97 (Order re Pending Motions); Docket 108 (Order
re Motion to Dismiss).
2
Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
3
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–49 (1986).
4
Id.
5
Id. (citing First National Bank of Arizona v. Cities Service Co., 391 U.S. 253 (1968)).
6
Id. at 255 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158–59 (1970)).
Case No. 3:16-cv-00136-SLG, TD Ameritrade, et al. v. Matthews
Order re Motion for Summary Judgment
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for the non-moving party.”7 If the evidence provided by the non-moving party is
“merely colorable” or “not significantly probative,” summary judgment is
appropriate.8
DISCUSSION
Mr. Matthews asserts counterclaims for copyright infringement pursuant to
the Copyright Act9 and for violations of the Digital Millennium Copyright Act10
(“DMCA”).11 To state a prima facie case of direct copyright infringement under the
Copyright Act, a party must satisfy two requirements: “(1) they must show
ownership of the allegedly infringed material and (2) they must demonstrate that
the alleged infringers violate at least one exclusive right granted to copyright
holders under 17 U.S.C. § 106.”12 Likewise, the ownership of a copyright is a
precondition to DMCA claims.13
“[T]he registration of the copyright certificate itself establishes a prima facie
7
Id. at 248.
8
Id. at 249.
9
17 U.S.C. § 101 et seq.
10
17 U.S.C. §§ 1201, 1202, 1203.
11
Docket 98 at 19–21, ¶¶ 109–24 (First Counterclaim); Docket 98 at 21–26, ¶¶ 125–36 (Second
Counterclaim); Docket 98 at 26–27 , ¶¶ 137–42 (Third Counterclaim).
12
A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001).
See MDY Indus., LLC v. Blizzard Ent., Inc., 629 F.3d 928, 944–46 (9th Cir. 2010) (“[W]e believe that §
1201 is best understood to create two distinct types of claims. First, § 1201(a) prohibits the circumvention
of any technological measure that effectively controls access to a protected work and grants copyright
owners the right to enforce that prohibition. . . . Section 1201(b)(1)’s prohibition . . . entitles copyright
owners to protect their existing exclusive rights under the Copyright Act.” (emphasis added)); 17 U.S.C.
§ 1202(b)(1) (“No person shall, without the authority of the copyright owner . . . intentionally remove or
alter any copyright management information[.]” (emphasis added)).
13
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presumption of the validity of the copyright in a judicial proceeding . . . .”14 But the
statutory presumption of validity can be rebutted.15 To rebut a presumption of
validity, an alleged infringer “must simply offer some evidence or proof to dispute
or deny [the] prima facie case . . . .”16
TD Ameritrade moves for summary judgment on each of Mr. Matthews’
counterclaims on the ground that Mr. Matthews does not own a valid copyright.
TD Ameritrade contends that Mr. Matthews “is not a valid copyright owner”
because his “‘software routines’ are derivative works adapted from TD
Ameritrade’s materials,” in particular its thinkScript User Manual, and because “the
Client Agreement expressly prohibits creating derivative works based on TD
Ameritrade’s software.”17
TD Ameritrade has not registered its thinkScript User Manual or the code
contained therein. However, the Copyright Act provides that “registration is not a
condition of copyright protection.”18 Instead, registration is “[p]ermissive,” and the
registration provisions of the Copyright Act merely “establish[] a condition—
copyright registration—that plaintiffs ordinarily must satisfy before filing an
14
North Coast Indus. v. Jason Maxwell, Inc., 972 F.2d 1031, 1033 (9th Cir. 1992).
15
Ent. Rsch. Grp., Inc. v. Genesis Creative Grp. Inc., 122 F.3d 1211, 1217 (9th Cir. 1997).
Desire, LLC v. Manna Textiles, Inc., 986 F.3d 1253, 1259 (9th Cir. 2021) (quoting United Fabrics Int’l,
Inc. v. C&J Wear, Inc., 630 F.3d 1255, 1257 (9th Cir. 2011)).
16
17
Docket 196 at 6 (Mot.).
18
17 U.S.C. § 408(a); see also Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 139 S. Ct.
881, 887 (2019) (“[A]n owner’s rights exist apart from registration . . . .”).
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infringement claim and invoking the Act’s remedial provisions.”19
A copyright owner holds the “exclusive right ‘to prepare derivative works
based upon the copyrighted work.’”20 “A ‘derivative work’ is a work based upon
one or more preexisting works” that “recast[s], transform[s], or adapt[s]” the
preexisting work.21 Mr. Matthews does not deny TD Ameritrade’s assertions that
significant portions of his registered work are based on TD Ameritrade’s materials
in the thinkScript User Manual and that TD Ameritrade authored the User Manual.
In fact, Mr. Matthews admitted at his deposition that he included the User Manual
in his copyright application, copied lines of code and block structures from the User
Manual, and based portions of his registered work on modifications of TD
Ameritrade’s User Manual and other TD Ameritrade materials.22
Rather, Mr.
17 U.S.C. § 408(a); Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 158 (2010) (“This provision is part
of the Act’s remedial scheme.”).
19
20
VHT, Inc. v. Zillow Grp., Inc., 918 F.3d 723, 237 (9th Cir. 2019) (quoting 17 U.S.C. § 106(2)). Both the
Supreme Court and Ninth Circuit have referred to parties as owners of copyrights in the absence of
registration. See Reed Elsevier, Inc., 559 U.S. at 157 (“Subject to certain exceptions, the Copyright Act []
requires copyright holders to register their works before suing for copyright infringement. . . . This scheme
gives copyright owners ‘the exclusive rights’ (with specified statutory exceptions) to distribute, reproduce,
or publicly perform their works. . . . When [] infringement occurs, a copyright owner ‘is entitled, subject to
the [registration] requirements of section 411, to institute an action’ for copyright infringement.” (emphasis
omitted)); In re World Auxiliary Power Co., 303 F.3d 1120, 1123 (9th Cir. 2002) (“The three companies
owned copyrights in the drawings, technical manuals, blue-prints, and computer software used to make
the modifications. . . . The companies did not register their copyrights with the United States Copyright
Office.”); see also 17 U.S.C. § 201(a) (“Copyright in a work protected under this title vests initially in the
author or authors of the work.”).
21
17 U.S.C. § 101; see also U.S. Auto Parts Network, Inc. v. Parts Geek, LLC, 692 F.3d 1009, 1015–16
(9th Cir. 2012).
See Docket 196-1 at 35 (“Q: And those are all things we discussed in the manual, correct? A: They’re
all – Q: Entries in the manual? A: Yes. Yes.”); Docket 196-1 at 14 (“Q: You understand that you submitted
[the User Manual] as part of your deposit? A: I do.”); Docket 196-1 at 32 (“Q: I think you’re on page 6 of
[the User Manual] right now? A: Yes. Q: And under the zero base on page 6, do you see the plot VOL
equals volume language? A: Yes. Q: And that’s the same language in line 4 of [Matthews’ study], correct?
A: Yes.”); Docket 196-1 at 28 (“Q: Could you turn to page 26 of [the User Manual]? A: Yes. Q: And do
you see in the second paragraph, the second line, it says you can use a switch statement? A: Yes. . . . Q:
22
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Matthews argues that TD Ameritrade does not own a copyright in those materials
because it has failed to produce evidence of copyright registration.23 But Mr.
Matthews’ argument incorrectly conflates copyright registration with copyright
ownership. While copyright registration is generally a prerequisite to pursuing an
infringement claim in court, “[a]n author gains ‘exclusive rights’ in [its] work
immediately upon the work’s creation, including rights of reproduction, distribution,
and display.”24
Here, TD Ameritrade has not brought a suit for copyright
infringement that would require registration.25 Instead, TD Ameritrade challenges
And then the next block on [Matthews’ study] has almost the same exact structure. It has the first line is a
def line. . . . A: Yeah. Over here? Okay, yeah. Yeah.”); Docket 196-1 at 15 (“[A]ll I was copyrighting was
the portion I created or modified” (emphasis added)); Docket 196-1 at 26 (“Q: Why did you include lines
with hash wizard in your copyright deposit? A: Because even though the wizard – you’re allowed,
according to the information, all the information that was available on the wizard, to modify and utilize
code output by the wizard; it wasn’t required that the wizard be identified. I did leave identifying marks in
code if I used the wizard or edited with the wizard in order to keep the profile of the program.”); Docket
196-1 at 27 (“It wasn’t always really bad either, but if I used the wizard to edit or to modify or to match
indicators together, I just left the nomenclature in there[.]”).
23
Docket 211 at 3–6 (Opp.).
24
Fourth Estate, 139 S. Ct. at 887 (citing 17 U.S.C. § 106; Eldred v. Ashcroft, 537 U.S. 186, 195 (2003));
see also Reed Elsevier, Inc., 559 U.S. at 157 (“Subject to certain exceptions, the Copyright Act [] requires
copyright holders to register their works before suing for copyright infringement. . . . This scheme gives
copyright owners ‘the exclusive rights’ (with specified statutory exceptions) to distribute, reproduce, or
publicly perform their works. . . . When [] infringement occurs, a copyright owner ‘is entitled, subject to
the [registration] requirements of section 411, to institute an action’ for copyright infringement.” (emphasis
omitted)). Mr. Matthews cites Fourth Estate in his surreply for the proposition that “protection is lost in
ordinary circumstances such as those presented here, if the author publishes the work without
registration of the work.” Docket 228 at 4 (Surreply). Although the Court declines to consider that
surreply, infra at 9, the Court notes that Fourth Estate does not stand for that broad proposition, but rather
that registration is generally a prerequisite to an infringement action. Fourth Estate, 139 S. Ct. at 887
(“Before pursuing an infringement claim in court, however, a copyright claimant generally must comply
with § 411(a)’s requirement that registration of the copyright claim has been made. Therefore, although
an owner’s rights exist apart from registration, registration is akin to an administrative exhaustion
requirement that the owner must satisfy before suing to enforce ownership rights.” (emphasis added)
(internal quotation marks and citations omitted)).
25
TD Ameritrade instead sought invalidation of a purported lien recorded by Mr. Matthews in its operative
complaint. See generally Docket 237 (Order).
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Mr. Matthews’ ownership of a valid copyright. And because TD Ameritrade’s
authorship of the thinkScript User Manual resulted in the exclusive right to create
derivative works upon its creation, and because the Client Agreement precludes
creation of derivative works based on TD Ameritrade’s work, Mr. Matthews does
not own a valid copyright in his derivative work.26
Mr. Matthews briefly argues that “TD Ameritrade’s thinkScript manual is not
[] copyrightable” because its “sole purpose is to provide instructions to users of []
thinkorswim for the creation of studies and strategies in thinkorswim” and is
therefore “strictly utilitarian.”27 But the only case Mr. Matthews cites held that a
vodka bottle was not entitled to copyright protection because it was a utilitarian
object that had “no ‘artistic features [that] can be identified separately and [that]
are capable of existing independently as a work of art.’”28
By contrast, TD
Ameritrade has identified numerous cases that have held that user manuals, or
portions of user manuals, are protectable by copyright law.29 And to the extent that
Mr. Matthews has copied lines of computer code contained within the User Manual,
computer code is explicitly protectable under the Copyright Act, and those portions
The Client Agreement provides: “I will not . . . create derivative works from, distribute, redistribute,
display, . . . sell or transfer, or create derivative products from the Services.” Docket 4-3 at 17, ¶ 7(b).
26
27
Docket 211 at 10 (citing Ets-Hokin v. Skyy Spirits, Inc., 225 F.3d 1068, 1078–80 (9th Cir. 2000)).
28
Ets-Hokin, 225 F.3d at 1080 (quoting Fabrica Inc. v. El Dorado Corp., 697 F.2d 890, 893 (9th Cir.
1983)).
29
Docket 223 at 7 (Reply) (citing cases).
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of the User Manual would therefore be protectable.30
Lastly, Mr. Matthews also asserts that under Nebraska law, the Client
Agreement should not be read to prohibit derivative works because such a result
would be absurd, and because the Client Agreement is ambiguous and should be
construed against TD Ameritrade as the drafter.31 Assuming Nebraska law applies
to the Client Agreement, the only reasonable interpretation of the Client Agreement
that Mr. Matthews signed is that it allows customers to use TD Ameritrade’s
services, including thinkorswim, while providing that TD Ameritrade retains the
exclusive rights that arise from copyright ownership. The Court already decided
as much when it dismissed Mr. Matthews’ Second Amended Answer and
Counterclaims:
To the extent Mr. Matthews seeks to pursue a counterclaim for
copyright infringement for code that is a derivative work of TD
Ameritrade’s source code, he is precluded from doing so, because the
Client Agreement specifically prohibits Mr. Matthews from creating a
derivative work and it is undisputed that he signed and agreed to its
terms.32
Indeed, that order specifically addressed substantially similar arguments regarding
contractual ambiguity that Mr. Matthews makes here and found those assertions
See 17 U.S.C. § 101 (defining “computer program”); see also Google, LLC v. Oracle America, Inc., 141
S. Ct. 1183, 1199 (2021) (“By defining computer programs in § 101, Congress chose to place this subject
matter within the copyright regime.”). If, in the alternative, TD Ameritrade’s computer code contained
within the User Manual were not copyrightable, then that would undercut Mr. Matthews’ argument that he
has a valid copyright in his modification and use of that same code.
30
31
Docket 211 at 6–10 (Opp.).
32
Docket 97 at 9 (Order). Mr. Matthews’ counterclaims survived only to the extent that he alleged his
registered work was not a derivative work of TD Ameritrade’s copyrights. Docket 97 at 9–11 (Order).
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unavailing.33 Nor is it “patently absurd” for TD Ameritrade to allow its customers
to use its materials and services while retaining its exclusive right under the
Copyright Act to prepare derivative works based on its copyrightable materials.34
Based on the foregoing, the Court finds that Mr. Matthews does not own a
valid copyright in relation to his counterclaims against TD Ameritrade. Those
counterclaims are therefore DISMISSED.35
CONCLUSION
The motion at Docket 196 is GRANTED. The motion at Docket 228 is
DENIED. TD Ameritrade’s motions at Dockets 193, 194, and 197 are DENIED AS
MOOT. Mr. Matthews’ motions at Dockets 227 and 229 are DENIED AS MOOT.
DATED this 25th day of August, 2021 at Anchorage, Alaska.
/s/ Sharon L. Gleason
UNITED STATES DISTRICT JUDGE
Docket 97 at 9 n.44 (Order) (citing Docket 4-3 at 17, ¶ 7(b) (Client Agreement)) (“Mr. Matthews asserts
that the Client Agreement ‘makes no reference to the thinkorswim platform, or permissions expressly
granted to users in the thinkorswim Platform.’ Docket 82 at 14. The Client Agreement provides ‘I will not
. . . create derivative products from the Services.’ Docket 4-3 at 17, ¶ 7(b). ‘Services’ is defined as ‘the
websites, the Brokerage Services, the TD Ameritrade Content and the Third-Party Content.’ Docket 4-3
at 15. ‘TD Ameritrade Content’ is defined as ‘all information, tools, and services available on your
website, other than Brokerage Services provided by you, and not by a third party.’ Docket 4-3 at 15.
Moreover, ‘websites’ is defined as ‘the internet sites of TD Ameritrade, whose domain name is registered
as http://www.tdameritrade.com and others.’ Docket 4-3 at 15 (emphasis added). Although the Client
Agreement does not make a specific reference to the thinkorswim platform, the agreement clearly
precludes users from creating derivative works from TD Ameritrade Content or Services on TD
Ameritrade’s websites, which includes the thinkorswim platform.”). Likewise, by the terms of the Client
Agreement, the thinkScript User Manual would plainly constitute “TD Ameritrade Content.”
33
34
Docket 211 at 8 (Opp.).
35
Mr. Matthews also requests that the Court accept his surreply at Docket 228. For the reasons provided
in the Court’s order at Docket 237, that request is denied.
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