Zillow Loses Second Round of Copyright Fight Over Real Estate Photos
Published: June 15, 2023
On June 7, 2023, the Ninth Circuit issued its opinion in VHT, Inc. v. Zillow Group, Inc., in which it affirmed the trial court’s findings of infringement against Zillow and the award of statutory damages. In 2019, the Ninth Circuit had previously found mostly in Zillow’s favor as to an earlier trial and had reversed and remanded the case back for further proceedings.
VHT “is the largest professional real estate photography studio” in the U.S., and thousands of its photos appear on Zillow’s website. Real estate brokers generally retain VHT to photograph properties they are attempting to sell and then edit the photos, save them in their electronic database, and deliver them to the client pursuant to a license agreement.
Zillow utilized photographs from VHT in two different ways. First, it primarily used them in connection with the display of properties listed for sale on Zillow’s site. Second, Zillow selected certain photographs “of artfully-designed rooms in some of those properties” to post to its “Digs” website, which is directed toward home improvement.
In 2019, the Ninth Circuit agreed with the lower Court that Zillow was “not liable for direct, secondary, or contributory infringement;” however, it had concluded that “Zillow’s addition of searchable functionality on the Digs home design webpages was not fair use.” It reversed the jury’s finding that Zillow had committed willful infringement and remanded the case for consideration of “whether VHT’s photos used on Digs are part of a compilation” or if they are “individual photos” for purposes of statutory damages.
After further motions and a bench trial, the district court found mostly in VHT’s favor. Both parties appealed the trial court’s findings to the Ninth Circuit.
The first issue the Ninth Circuit addressed was whether the U.S. Supreme Court’s 2019 decision in Fourth Estate Public Benefit Court v. Wal-Street.com, LLC, required the dismissal of VHT’s infringement claims since the Copyright Office had not completed the registration process for VHT’s images at the time VHT filed suit. (VHT did apply for registration prior to filing the lawsuit.)
The Ninth Circuit noted that the U.S. Supreme Court’s Fourth Estate decision was decided just 11 days before it issued its opinion in the first Zillow appeal, and neither party raised any issues with regard to that decision. On remand, the district court found that VHT “either complied with [the prefiling registration requirement] or was excused from compliance.” The Ninth Circuit agreed with this finding.
In determining that VHT was excused from this prefiling requirement, the Ninth Circuit recognized that it had to consider three issues: “[whether] (1) the claim is `wholly collateral’ to the substantive claim of entitlement; (2) there is a `colorable showing of irreparable harm;’ and (3) `exhaustion would be futile.'” First, the Ninth Circuit held that copyright registration is “wholly collateral” to the issue of whether Zillow infringed on VHT’s copyrights. Second, the Ninth Circuit held that dismissal would cause irreparable harm to VHT because it would not be able to bring the claims again because they would be barred by the statute of limitations. Third, allowing the excusal would not undermine the purpose of the prefiling requirement since the Copyright Office had granted the registrations years before the case went to trial the second time.
The main issue the Ninth Circuit considered was whether the photographs from VHT’s database constituted a “compilation” for which there would only be a single statutory infringement award; or whether the individual photos from VHT’s database could result in individual statutory awards. The district court had rejected Zillow’s arguments that “VHT’s images are a `compilation’ because they are part of VHT’s master photo database and because the Copyright Office determined that VHT’s database is a compilation.” Instead, the district court found that “to the extent, the independent economic value of the individual photos separate from the database remains a factor, the jury’s finding indicated that the individual images were individual works.”
The Ninth Circuit began by noting that “the question of whether a work constitutes a `compilation’ for the purposes of statutory damages pursuant to … the Copyright Act is a mixed question of law and fact.” The Copyright Act contains a provision that “all the parts of a compilation or derivative work constitutes one work” for purposes of statutory damages. Thus, the Ninth Circuit had to determine whether, for purposes under that provision, “the photos at issue qualified as `one work.'”
VHT argued it owned copyrights in both the individual photos and in its database; and that “the Copyright Office has recognized the dual copyright nature of registration of the database itself, as well as the works within it.” It noted that VHT was “not claiming `that Zillow infringed the aspects of its database that make it a compilation, i.e., the selection, coordination, and arrangement of preexisting pictorial works.”
Zillow, on the other hand, asked the Ninth Circuit “to follow a simple syllogism” that because the photos were in a database and the database was registered as a compilation, the photos must have been part of a compilation as well. The Ninth Circuit stated that this argument “elevates the form of registration above all else, a conclusion [that it and other courts] have rejected.”
In practicality, the individual photos are created at the request of a specific VHT client and then licensed and given to that client for marketing an individual listing. VHT licenses the individual photos themselves, not the database, and the database itself is not published.
Likewise, Zillow used each photo independently to market home designs. Zillow would select photographs based on the content of the images, specifically seeking “photos of artfully- designed rooms for its Diggs platform.” Because it did not select an “arrangement of the photos within the database,” it infringed on VHT’s rights in the individual photos and not in the database.
The Ninth Circuit also recognized that the Copyright Act “does not say that any work included in a compilation cannot also exist as a separate independent work.” This supported the conclusion that “though VHT stored photos in a database, it marketed and licensed individual photos that existed as separate pictorial works” and that these photos had separate independent economic value from its database.
Zillow finally argued that if VHT was claiming that the photos that had been registered as part of a database compilation were now individual, then VHT’s registration of the database as a compilation must have been invalid. The Ninth Circuit rejected this argument without much analysis.
In the first trial, the jury had awarded VHT damages in the amount of $1,500 per image after finding that Zillow had willfully infringed VHT’s copyrights to 2,700 photos. After remand, the district court awarded VHT statutory damages of $800 each for approximately 2,300 images and $200 per image for the remaining 388 photos. VHT appealed this ruling and argued that $1,500 per image was the proper statutory damages that should have been awarded.
In rejecting VHT’s claim that the district court erred by not awarding it the $1,500 per image, the Court noted that those damages had been awarded by the just as a result of a finding of willful infringement that did not exist in the retrial. Thus, the Ninth Circuit concluded that the district court had properly awarded the correct amount of damages to VHT after the retrial.