Zillow Loses Second Round of Copyright Fight

The Ninth Circuit recently issued an opinion affirming that Zillow infringed thousands of copyrights owned by a real estate photography studio. Scott Hervey and James Kachmar discuss this case on this episode of The Briefing.

Watch this episode on the Weintraub YouTube channel, here.

Show Notes:

Scott:
In 2019, the 9th Circuit affirmed the trial court’s judgment against Zillow Group based on Zillow’s use of VHT’s photographs on Zillow’s Digs platform. In June of this year 2023, this case found itself back up to the 9th Circuit. I’m joined by my partner, James Kachmar, to talk about this recent decision on this episode of The Briefing You. Thanks for joining us. I’m joined today by Weintraub litigation partner, James Kachmar. James, thanks for joining us today.

James:
Thanks, Scott, for having me.

Scott:
Certainly, James. Let’s start by providing some context for our viewers and listeners. Could you briefly explain the background of the case between VHT and Zillow Group?

James:
Sure, Scott. Everyone should know what Zillow is the website with homes for sale. VHT is the largest professional real estate photography studio in the US. It is generally engaged by real estate agents and brokers to photograph homes for sale. These photos are edited, loaded into VHT’s database, and then sent back to the agents and brokers pursuant to a license agreement to help promote their listings. VHT’s photographs appear on Zillow’s website one of two ways. First, Zillow will use these photographs as part of showing property listings on its website. Second, Zillow would feature some of these photographs on their website, Digs, to offer users or give people some home improvement ideas. VHT filed a copyright infringement lawsuit against Zillow, claiming that the photos were being used without their permission.

Scott:
In the previous trial, the 9th Circuit found in favor of Zillow on most counts, but reversed the findings of fair use. Regarding the use of the photos on the Diggs website. Could you elaborate on how the court reached that conclusion?

James:
Sure. The 9th Circuit in the first case, which is referred to as Zillow One, determined that Zillow had added searchable functionality on its Zigs website, which made it not a fair use of VHT’s photographs. They concluded that Zillow had committed copyright infringement in doing so. However, the court in Zillow One held that Zillow was not liable for direct, secondary or contributory infringement and remanded the case back to the district court for further proceedings. This resulted in further motion practice and a second trial.

Scott:
The 9th Circuit addressed the issue of copyright registration and whether VHT’s claims should be dismissed due to incomplete registration. Could you explain the court’s reasoning and how it applied the U.S. Supreme Court’s fourth estate decision?

James:
Sure. Just days before the 9th Circuit rendered its opinion in Zillow One, the US. Supreme Court issued its decision in Fourth Estate Public Benefit versus Wallstreet.com, in which it found that the registration requirement to bring a copyright infringement claim can only be satisfied when the Copyright Office has registered the copyright, not merely when the application for registration is filed by the plaintiff. When the case went back to the lower court, Zillow argued that because VHT had filed its lawsuit before the Copyright Office had registered its copyrights, the action should be dismissed. The lower court, however, found that dismissal would cause irreparable harm to VHT, especially given the extensive litigation to date, and held that excusing this requirement did not undermine the purpose of the Act’s pre-filing registration requirement. The 9th Circuit, on a second appeal, agreed with the court’s finding in this regard.

Scott:
The Supreme Court’s decision in Fourth Estate was due to what had been a split among the Circuits with regard to the requirement the pre-filing requirement of the registration copyright registration. The 9th Circuit had long held that the mere filing of the registration application was required, while other Circuits had held that the actual issuance of the registration was required prior to the commencement of a lawsuit.

James:
That’s correct, Scott.

Scott:
Another issue main issue that the 9th Circuit considered in this case was whether VHT’s photos constituted a compilation or individual work for the purpose of statutory damages. James, how did the court approach this question, and what factors influenced its decision?

James:
Sure, Scott. As I mentioned earlier, VHT would load the photographs into its database, and VHT had applied to register its database of its photos as a compilation with the Copyright Office. The court had to determine whether the photos qualified as one work under the Copyright Acts provision that treats all parts of a compilation as a single work for statutory damages. VHT argued that it owned copyrights in both the individual photos as well as the database, while Zillow claimed that the database registration automatically made the photos part of a compilation. In essence, if the court accepted Zillow’s argument, there would only be one copyright violation I. E. The database. However, on the other hand, if the court accepted VHT’s argument that each photo in the database was its own separate work, then the use of each photo would be a separate copyright violation, allowing for damages for each photo. In the end, the court rejected Zillow’s argument and emphasized that the individual photos had separate independent economic value from VHT’s database.

Scott:
That makes sense, James. In the first trial, VHT was awarded damages of one $500 per image due to willful infringement by Zillow. However, the district court awarded different amounts in the retrial. Could you explain the reasoning behind this decision and VHT’s appeal?

James:
Sure Scott. The 9th Circuit determined that the higher damages awarded in the first trial were because there was a specific finding of willful infringement by Zillow, which was later reversed on the retrial. The evidence showed only innocent infringement by Zillow, and the court concluded that the district court properly awarded lower damages amount because the evidence showed innocent infringement and not the willful infringement that had existed in the first trial. Therefore, the 9th Circuit rejected VHT’s appeal for higher damages.

Scott:
James, thanks for discussing this case with us today. I think this case serves as a reminder of the importance of the Fourth Estate case, the importance of pre-filing copyright registration applications before commencing litigation, and I also think this case serves as a reminder of the importance of copyright diligence in the digital age and the considerations courts make when determining infringement and damages. As you and I know, it’s an evolving area of law, and it’s crucial for content creators and users to understand their rights and their obligations.

James:
Thanks, Scott. It’s been my pleasure. Thank you for having me.

Scott:
Well, that wraps it up for this installment of The Briefing by Weintraub Tobin. Please remember to like and subscribe to both our podcast and our YouTube channel. And if you found this piece interesting, well, we’ve got over 100 episodes for you to choose from, and you can also visit us at theiplawblog.com.