Td Ameritrade, Inc. v. James Matthews

• Court: Court of Appeals for the Ninth Circuit
• Decided: June 14, 2022
• Docket: 21-35788
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUN 14 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

TD AMERITRADE, INC.; TD No. 21-35788 AMERITRADE HOLDING CORPORATION; TD AMERITRADE IP D.C. No. 3:16-cv-00136-SLG COMPANY, INC.; TD AMERITRADE SERVICES COMPANY, INC., MEMORANDUM* Plaintiffs-counter- defendants-Appellees,

v.

JAMES RICHARD MATTHEWS,

Defendant-counter-claimant- Appellant.

Appeal from the United States District Court for the District of Alaska Sharon L. Gleason, Chief District Judge, Presiding

Submitted June 8, 2022** Anchorage, Alaska

Before: HURWITZ, BRESS, and H. THOMAS, Circuit Judges.

James Matthews opened an investment account with TD Ameritrade,

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). employing a platform allowing him to use the company’s “thinkScript”

programming code to aid in trading securities. He then registered a copyright for a

compilation work that included code from TD Ameritrade’s thinkScript User

Manual. Matthews then filed a nonconsensual lien against TD Ameritrade’s

property in the Anchorage Recording District.

TD Ameritrade sued Matthews seeking cancellation of the lien and injunctive

relief. Matthews asserted counterclaims for copyright infringement and alleged

violations of the Digital Millennium Copyright Act (“DMCA”). The district court

granted summary judgment to TD Ameritrade on the counterclaims, and

subsequently entered a final judgment in favor of TD Ameritrade on the complaint

and counterclaims. On appeal, Matthews challenges only the summary judgment on

the counterclaims. Reviewing de novo, see Gold Value Int’l Textile, Inc. v.

Sanctuary Clothing, LLC, 925 F.3d 1140, 1143 (9th Cir. 2019), we affirm.

1. A party alleging copyright infringement must “show ownership of the

allegedly infringed material.” A&M Recs., Inc. v. Napster, Inc., 239 F.3d 1004, 1013

(9th Cir. 2001); see also MDY Indus., LLC v. Blizzard Ent., Inc., 629 F.3d 928, 944

(9th Cir. 2010) (ownership of a copyright is also an element of a DMCA claim).

Ownership “vests initially in the author or authors of the work.” DC Comics v.

Towle, 802 F.3d 1012, 1023 (9th Cir. 2015) (quoting U.S. Auto Parts Network, Inc.

v. Parts Geek, LLC, 692 F.3d 1009, 1015 (9th Cir. 2012)). The copyright owner

2 “has a number of exclusive rights, including the right ‘to prepare derivative works’

based on [the] original work.” Id. (quoting 17 U.S.C. § 106). Although copyright

registration “establishes a prima facie presumption of the validity of the copyright,”

N. Coast Indus. v. Jason Maxwell, Inc., 972 F.2d 1031, 1033 (9th Cir. 1992), that

presumption may be rebutted, see Desire, LLC v. Manna Textiles, Inc., 986 F.3d

1253, 1259 (9th Cir. 2021). TD Ameritrade did so here, presenting uncontroverted

evidence that it was the copyright owner of the thinkScript User Manual and the

code the Manual contained. It thus had the “exclusive right to prepare derivative

works.” VHT, Inc. v. Zillow Grp., Inc., 918 F.3d 723, 737 (9th Cir. 2019) (cleaned

up) (quoting 17 U.S.C. § 106(2)). Because Matthews admitted that he used portions

of the Manual to create his compilation work, the district court correctly found that

he could not claim copyright ownership of that work.

2. TD Ameritrade’s failure to register a copyright does not prevent it from

asserting its ownership rights in response to Matthews’s counterclaims. See 17

U.S.C. § 408(a) (“[R]egistration is not a condition of copyright protection.”). Nor

does Twin Books Corp. v. Walt Disney Co., 83 F.3d 1162 (9th Cir. 1996), upon which

Matthews relies, require TD Ameritrade to publish its materials with a copyright

notice to retain copyright protection. Twin Books interpreted the 1909 Copyright

Act. See 83 F.3d at 1165 (“It is undisputed that the 1909 Copyright Act, 17 U.S.C.

§§ 1, et seq. (superseded 1976) applies in this case.”). Copyright notice formalities

3 were subsequently eliminated from federal copyright statutes. See Berne

Convention Implementation Act of 1988, Pub. L. No. 100-568, § 7, 102 Stat. 2853

(1988) (amending 17 U.S.C. § 401); Golan v. Holder, 565 U.S. 302, 307 (2012)

(formalities are “no longer require[d] as prerequisites to copyright protection”).

3. The district court also did not err in its construction of the TD

Ameritrade Client Agreement. A client signing the agreement acknowledges that “I

will not . . . create derivative products from the Services.” The district court correctly

held that this plain language allows customers to use TD Ameritrade’s materials

while preserving TD Ameritrade’s exclusive rights to derivative works. See DC

Comics, 802 F.3d at 1023.

AFFIRMED.