Skip to content

VHT Inc v. Zillow Group Inc.

Ninth Circuit finds that online real estate marketplace Zillow did not directly infringe photos from VHT Inc., real estate photography studio, by hosting those photos and making them available to others, but that Zillow’s tagging and cataloging of other photos to provide search capabilities did constitute direct infringement and was not transformative fair use.

Ninth Circuit finds that online real estate marketplace Zillow did not directly infringe photos from VHT Inc., real estate photography studio, by hosting those photos and making them available to others, but that Zillow’s tagging and cataloging of other photos to provide search capabilities did constitute direct infringement and was not transformative fair use.

Plaintiff VHT Inc., a real estate photography studio, sued online real estate service Zillow for copyright infringement, alleging that Zillow’s use of VHT’s photographs on its website exceeded the scope of the licenses VHT had with brokers, agents and listing services. Zillow used VHT’s photos on two parts of its website: the “Listing Platform” and “Digs.” The core of the website, the Listing Platform features photos and information about real estate properties. Digs features photos of artfully designed rooms in some of those properties and is geared toward home improvement and remodeling. Zillow tagged photos from the Listing Platform so that Digs users could search the database by various criteria, such as room type, style, cost and color.

The district court granted partial summary judgment in favor of Zillow on the direct infringement claim related to its use of the images on the Listing Platform. VHT’s other claims advanced to trial, after which the jury awarded it $8.27 million in damages. The district court granted in part Zillow’s post-trial motion for judgment notwithstanding the verdict, finding in favor of Zillow on VHT’s secondary liability claims related to the Digs photos, but deeming Zillow’s use of other Digs photos to be willful infringement. The court also reduced the damages to $4 million. 

The parties cross-appealed issues stemming from the partial summary judgment, the jury verdict and the judgment notwithstanding the verdict.
The Ninth Circuit first analyzed the alleged direct infringement for use of the images on the Listing Platform and Digs sites, then addressed the issue of secondary liability, and concluded with an analysis of damages. 

The focus of the court’s analysis on the direct infringement claims was causation — whether VHT could establish that Zillow’s “volitional conduct” was the direct cause of the infringement.  Noting that the volitional conduct requirement “takes on greater importance in cases involving automated systems, like the Zillow website,” the court cited its 2017 decision in Perfect 10 Inc. v. Giganews Inc. (coincidentally decided on the first day of the VHT trial), for the proposition that website owners may be held liable for direct copyright liability “when they are actively involved in the infringement.” To demonstrate the required conduct, VHT must provide some evidence showing Zillow exercised control beyond the general operation of selected images for upload, download, transmission or storage, or instigated any copying, storage or distribution of VHT’s photos. The Ninth Circuit concluded that VHT failed to meet this burden for either the Listing Platform and for the majority of the Digs photos. 

On the Listing Platform, third parties, such as real estate agents and brokers who use VHT’s services, select and upload each photo, designate how long the photos can be used and certify the extent of their rights to use each photo. Zillow’s system classifies each photo based on these designations. Because the content of the Listing Platform is populated with information submitted by third-party sources who had attested to the permissible use of that information and Zillow’s system for managing photos on the Listing Platform was constructed in a copyright-protective way, the court concluded that VHT could not satisfy its burden of proving that Zillow selected the photos that were uploaded.

The photos used on the Digs portion of the site fell into three categories: (1) nearly 4,000 photographs that the Zillow moderators had selected and tagged for searchable functionality; (2) nearly 2,100 displayed but nonsearchable images; and (3) more than 22,000 photographs that were not displayed in Digs (a relatively small portion of which were tagged for searchability). While the jury found that Zillow had infringed VHT’s rights in all of them — more than 28,000 photographs — the district court granted Zillow’s motion for judgment notwithstanding the verdict for all but the 3,912 photos that Zillow moderators had selected and tagged for searchability.  

The Ninth Circuit affirmed the district court’s determination with respect to the more than 22,109 photos that were not displayed in the Digs portion of the site, rejecting VHT’s theory that the jury could have found direct copyright infringement by reasonably inferring that Zillow made them available for public display. Neither the language of the statute nor case law supports the notion that the display right under the Copyright Act encompasses an exclusive right to “make available for display.” Perhaps more important, the court of appeals noted, VHT had not advanced this theory at trial, precluding the court from sustaining the jury verdict of direct infringement on these grounds.  

The Ninth Circuit also affirmed the district court’s determination that Zillow did not violate VHT’s display rights in the 2,093 images that were displayed but tagged as searchable in the Digs portion of the site. These were photos that Digs users copied to “personal boards” — digital bulletin boards of images that users create by saving or uploading images from the Listing Platform, or by uploading their own images. Users can share a link to their boards, typically for private use, with other users. Zillow had a process by which images with the correct rights profile, once saved to a personal board, would automatically be put in a queue for review by a Zillow moderator, who could then decide whether to designate the photo for tagging on Digs and for public display. Not all photos in the queue are reviewed.  

The court rejected VHT’s argument that these photos had the potential to be tagged and therefore were infringing, explaining that “the possibility that images might be moderated and tagged — conduct that is volitional — is not sufficient to transform Zillow from a ‘passive host’ to a ‘direct cause’ of the display of VHT’s images.” Unlike photos that Zillow curated, selected and tagged for searchable functionality, these photos were displayed by user actions, not the conduct of Zillow or its moderators. Further, Zillow’s encouragement of users to share photos through its site was not sufficient to “instigate” copying and incur liability.

Zillow did not appeal the jury’s verdict with respect to the nearly 4,000 photos its moderators selected and tagged, but appealed the district court’s summary judgment decision that “as a  matter of law … Digs’ searchable functionality does not constitute a fair use.” 

Zillow argued that Digs functioned as a search engine and Zillow’s tagging to allow users to find certain decorating or remodeling features in images and its display of the images in response to a search were transformative. VHT argued that Zillow’s Digs was not a search engine. After reviewing the precedent on search engines and fair use, and noting that “the label ‘search engine’ is not a talismanic term that serves as an on-off switch as to fair use,” the Ninth Circuit considered “the details and function” of Zillow’s Digs in applying the fair use factors.  

Although it reasoned that Digs was a form of a search engine because it offers users searchable functionality, the court concluded that it was “qualitatively different than Google and other open-universe search engines” because it did not scan the entire internet. The search results did not direct users to the original source of the photos, but instead linked to other pages within Zillow’s website “and, in some cases, to third-party merchants that sell items similar to those featured in the photo.”

The court also noted that Digs also displayed the entire VHT image, not merely a thumbnail, so the image served the same function as the previous VHT version and was not transformative. Zillow’s use of the images was also distinguishable from other acceptable uses, such as Google Books, because Zillow’s use “does nothing to further the use of copyrighted works for the socially valuable purposes identified in the Copyright Act itself, like ‘criticism, comment, news reporting, teaching, scholarship, or research.’”

The Ninth Circuit also affirmed the district court’s ruling against secondary infringement, finding that Zillow did not materially contribute to or induce the infringement. The court held that there was insufficient evidence that Zillow had the technical ability to screen out or identify infringing VHT photos among the many photos that users saved or uploaded daily to Digs.

Furthermore, in its letter to Zillow, VHT identified the alleged infringing images only by property address, which “in no way identified the proper feed or the correct photo. Thus, Zillow did not have appropriately ‘specific’ information necessary to take ‘simple measures’ to remedy the violation.”

Finally, the court addressed the size of the damages award, which depended on Zillow’s willfulness in its infringement and whether VHT’s photos used on Digs were part of a “compilation” or individual works.

If the VHT photo database was 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. Because there were numerous copyright registrations and thousands of photos, however, the court declined to rule on the compilation issue and instead remanded to the district court to determine whether the VHT photos were a compilation.

With regard to Zillow’s willfulness, the court reversed the district court’s finding of willful infringement. It explained that VHT’s notice to Zillow of potential infringing use was “minimal: one letter with a list of allegedly infringing photos, designated by residential street address, not web address.” Furthermore, the court noted, Zillow took appropriate responsive measures after receiving the notice by immediately requesting information to confirm VHT’s copyright ownership and cross-reference the photos with licensing information, which VHT failed to provide.   

Summary prepared by David Grossman and Camron Dowlatshahi