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
`
`Case 3:16-cv-00136-SLG Document 238 Filed 08/25/21 Page 1 of 9
`
`

`

`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
`Page 2 of 9
`Case 3:16-cv-00136-SLG Document 238 Filed 08/25/21 Page 2 of 9
`
`

`

`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).
`
`13 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)).
`
`Case No. 3:16-cv-00136-SLG, TD Ameritrade, et al. v. Matthews
`Order re Motion for Summary Judgment
`Page 3 of 9
`Case 3:16-cv-00136-SLG Document 238 Filed 08/25/21 Page 3 of 9
`
`

`

`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).
`
`16 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)).
`
`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 . . . .”).
`
`Case No. 3:16-cv-00136-SLG, TD Ameritrade, et al. v. Matthews
`Order re Motion for Summary Judgment
`Page 4 of 9
`Case 3:16-cv-00136-SLG Document 238 Filed 08/25/21 Page 4 of 9
`
`

`

`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.
`
`
`19 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.”).
`
`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).
`
`22 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:
`
`Case No. 3:16-cv-00136-SLG, TD Ameritrade, et al. v. Matthews
`Order re Motion for Summary Judgment
`Page 5 of 9
`Case 3:16-cv-00136-SLG Document 238 Filed 08/25/21 Page 5 of 9
`
`

`

`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).
`
`Case No. 3:16-cv-00136-SLG, TD Ameritrade, et al. v. Matthews
`Order re Motion for Summary Judgment
`Page 6 of 9
`Case 3:16-cv-00136-SLG Document 238 Filed 08/25/21 Page 6 of 9
`
`

`

`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
`
`
`26 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).
`
`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).
`
`Case No. 3:16-cv-00136-SLG, TD Ameritrade, et al. v. Matthews
`Order re Motion for Summary Judgment
`Page 7 of 9
`Case 3:16-cv-00136-SLG Document 238 Filed 08/25/21 Page 7 of 9
`
`

`

`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
`
`
`30 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.
`
`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).
`
`Case No. 3:16-cv-00136-SLG, TD Ameritrade, et al. v. Matthews
`Order re Motion for Summary Judgment
`Page 8 of 9
`Case 3:16-cv-00136-SLG Document 238 Filed 08/25/21 Page 8 of 9
`
`

`

`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
`
`
`33 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.”
`
`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.
`
`Case No. 3:16-cv-00136-SLG, TD Ameritrade, et al. v. Matthews
`Order re Motion for Summary Judgment
`Page 9 of 9
`Case 3:16-cv-00136-SLG Document 238 Filed 08/25/21 Page 9 of 9
`
`