By Thomas Long, J.D.
A direct infringement ruling against the real estate website operator was affirmed with respect to 2,093 searchable photos owned by photography studio VHT and posted by Zillow users. Zillow was not liable for users’ posting of thousands of other photos to a non-search portion of the site. A jury’s finding of willfulness was reversed for lack of evidence that Zillow had the requisite knowledge of its users’ infringement.
The U.S. Court of Appeals for the Ninth Circuit has affirmed affirm a district court’s summary judgment in favor of real estate website operator Zillow on photography studio VHT’s claim that Zillow directly infringed tens of thousands of photos on the "Listing Platform" portion of Zillow’s website. VHT failed to establish that Zillow engaged in volitional conduct by exercising control over the content of the Listing Platform. Zillow also was not liable for over 22,000 photos posted by users to a non-searchable portion of its website called "Digs," but it was liable for infringing nearly 2,100 photos that were included in a searchable database. The site’s search engine was not transformative in nature and did not make Zillow’s use of the photos a noninfringing fair use. A finding of willfulness by the jury was reversed because there was no evidence that Zillow had the requisite awareness of its users’ infringing activity. The appellate court remanded the case for determination of whether Zillow’s "Digs" photos were part of a compilation—which would be subject to a single statutory damages award—or were individual photos, allowing VHT to obtain a separate damages award for each (VHT, Inc. v. Zillow Group, Inc., March 15, 2019, McKeown, M.).
Zillow receives millions of photos each day through feeds provided by real estate brokers, multiple listing services, and other sources under agreements including assurances from the feed provider to Zillow regarding the scope of the providers’ permissible use of the photos and purporting to confer a broad license to Zillow. The core of Zillow’s website was called the "Listing Platform"; it featured photos and information about real estate properties, both on and off the market. Another content area on Zillow’s site, "Digs," was geared toward home design and renovation. It allowed users to upload their own images and to "dig" images from home details pages on Zillow’s main website.
VHT alleged that Zillow’s use of photos on the "Listing Platform" and "Digs" parts of its website exceeded the scope of VHT’s licenses to brokers, agents, and listing services that provided those photos to Zillow. The district court granted partial summary judgment on a limited set of claims. The jury found in favor of VHT on most remaining claims, awarding over $8.27 million in damages. The district court partially granted Zillow’s post-trial motion for judgment notwithstanding the verdict, reversing in part the jury verdict and reducing total damages to approximately $4 million. The parties cross-appealed issues stemming from partial summary judgment, the jury verdict, and judgment notwithstanding the verdict.
Listing Platform photos—direct infringement. The appellate court affirmed the district court’s summary judgment in favor of Zillow on direct infringement of the 54,257 Listing Platform photos at issue. The court held that VHT failed to establish that Zillow engaged in volitional conduct by exercising control over the content of the Listing Platform. Zillow had agreements with its feed providers granting it an express license to use, copy, distribute, publicly display, and create derivative works from the feed data on its websites. In the Ninth Circuit’s view, Zillow did not engage in volitional conduct necessary to support a finding of direct liability. The content of the Listing Platform was populated with data submitted by third-party sources that attested to the permissible use of that data, and Zillow’s system for managing photos on the Listing Platform was constructed in a copyright-protective way. The photos on the Listing Platform were not "selected" by Zillow. Zillow required feed providers to certify the extent of their rights to use each photo. Zillow’s system classified each photo as "evergreen" or "deciduous" depending on the scope and extent of the rights asserted by the third parties, and it programmed its automated systems to treat each photo consistently with that scope of use certified to by the third party. Zillow reasonably responded to a takedown request by VHT, in the court’s view.
Digs photos—direct infringement. With respect to direct liability on the Digs photos, the Ninth Circuit affirmed the district court’s grant in favor of Zillow of judgment notwithstanding the verdict on 22,109 non-displayed photos and 2,093 displayed but not searchable photos. The appellate court held that VHT did not present substantial evidence that Zillow, through the Digs platform, directly infringed its display, reproduction, or adaption rights. The only display that occurred was triggered by the user. Zillow’s automated processes that stored or cached VHT’s photos were insufficiently volitional to establish that Zillow directly infringed VHT’s reproduction and adaption rights in these non-searchable photos, the court said. Unlike photos that Zillow curated, selected, and tagged for searchable functionality, these 2,093 photos were copied to "personal boards" based on user actions, not the conduct of Zillow or its moderators. Zillow’s behind-the-scenes technical work on Digs photos was not evidence that Zillow "selected any material for upload, download, transmission, or storage," in the Ninth Circuit’s view. "Zillow’s conduct with respect to these photos amounts to, at most, passive participation in the alleged infringement of reproduction and adaption rights and is not sufficient to cross the volitional-conduct line," the court said.
Digs photos—fair use. The appellate court upheld summary judgment in favor of VHT on 3,921 displayed, searchable Digs photos. Zillow did not appeal the jury’s finding of direct infringement with respect to these photos, but it did assert a fair use defense. The court concluded that fair use did not absolve Zillow of liability because Zillow’s tagging of the photos for searchable functionality was not a transformative fair use. The court rejected Zillow’s argument that its service made a transformative use of the photos because it was essentially a search engine. Though the court agreed that Digs was a type of search engine because it offers searchable functionality, it was qualitatively different than Google and other open-universe search engines. Digs was a closed-universe search engine that did not "crawl" the web. The search results did not direct users to the original sources of the photos, such as VHT’s website. Rather, they linked to other pages within Zillow’s website. According to the Ninth Circuit, the fact that Digs made the images searchable did not fundamentally change their original purpose when produced by VHT: to artfully depict rooms and properties. Accordingly, the fair use defense failed.
Digs Photos—Secondary liability. The Ninth Circuit affirmed the district court’s grant in favor of Zillow of judgment notwithstanding the verdict on secondary liability, both contributory and vicarious, on the Digs photos. As for contributory liability, Zillow did not have appropriately specific information necessary to take simple measures to remedy the users’ violations. Zillow did not take active steps that could be considered inducement for its users to infringe. As for vicarious liability, there was insufficient evidence that Zillow had the requisite right and ability to control users’ conduct.
Damages. As to damages, the Ninth Circuit remanded consideration of the issue whether VHT’s photos used on Digs were part of a compilation or were individual photos. If the VHT photo database was a "compilation," and therefore one "work" for the purposes of the Copyright Act, then VHT would be limited to a single award of statutory damages for Zillow’s use of thousands of photos on Digs. However, if the database was not a compilation, then VHT could seek damages for each photo that Zillow used. The district court did not make an explicit determination about compilation and the specifics of compilation were not put before the jury, so the appellate court sent the case back to the district court to make this threshold determination.
Willfulness. Finally, the appellate court reversed the district court’s denial of judgment notwithstanding the verdict on the issue of willfulness and vacated the jury’s finding on willfulness. The panel concluded that substantial evidence did not show that Zillow was "actually aware" of its infringing activity, nor that Zillow recklessly disregarded or willfully blinded itself to its infringement.
Attorneys: Stephen M. Rummage (Davis Wright Tremaine LLP) for VHT, Inc. Ian B. Crosby (Susman Godfrey LLP) for Zillow Group, Inc. and Zillow, Inc.
Companies: VHT, Inc.; Zillow Group, Inc.; Zillow, Inc.
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