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IP/Entertainment Case Law Updates

VHT, Inc. v. Zillow Group, Inc., et al.

Ninth Circuit holds that real estate website Zillow is liable for 2,700 separate statutory damage awards, one for each of plaintiff’s photos used on Zillow’s website, because plaintiff claimed infringement of each photo, not their selection and arrangement in compilation, and each photo held “independent economic value.” 

In this long-running copyright infringement lawsuit between plaintiff VHT Inc. and defendants Zillow Group Inc. and Zillow Inc., the online real estate service, a panel of the Ninth Circuit heard cross-appeals from the parties on issues largely relating to VHT’s damages. VHT, the largest professional real estate photography studio in the country, serves its clients by photographing properties, editing the photographs, and saving them to its electronic database for delivery to and use by real estate brokerages and listing services in marketing the properties. In July 2015, VHT sued Zillow for its use of VHT’s photos on the main “Listing Platform” section of Zillow’s website, as well as on a section of the website called “Digs” that features photographs of artfully designed rooms to inspire home improvement and remodeling ideas. After the district court granted partial summary judgment in favor of Zillow on the claims relating to uses of the photographs on the Listing Platform, the case proceeded to trial in 2017, and a jury awarded VHT $8.27 million in damages. Following a posttrial motion by Zillow that resulted in a reduction of the damages to $4 million and a finding that Zillow had willfully infringed 2,700 photographs, the parties cross-appealed to the Ninth Circuit, where the finding of willfulness was vacated and the case was remanded to the district court (read our summary of the Ninth Circuit’s decision here). On remand, the district court conducted a bench trial to determine whether Zillow’s infringement was innocent or not and reassessed damages in the amount of $1,927,200 (read our summary of the district court’s decision here). The parties again cross-appealed to the Ninth Circuit.

One of the issues on appeal was whether VHT’s claims should be dismissed with prejudice because VHT did not satisfy the requirement of registering its photos with the Copyright Office prior to filing suit, pursuant to 17 U.S.C. Sec. 411(a). While VHT had submitted its completed copyright registration applications to the Copyright Office prior to filing suit, registration certificates were not issued by the Copyright Office until after the suit was filed. The issue was first raised by Zillow after the case had been remanded to the district court because the Supreme Court’s 2019 ruling in Fourth Estate Public Benefit Corp. v., LLC held that “‘registration … has been made’ within the meaning of 17 U.S.C. § 411(a) not when an application for registration is filed, but when the [Copyright] Register has registered a copyright after examining a properly filed application.” According to Zillow, VHT failed to satisfy this requirement before filing suit. The district court concluded that, given the late stage of the proceedings, VHT had either complied with the Section 411(a) requirements or was excused from compliance, and that dismissal of the case at that stage would amount to a “massive waste of judicial resources.” 

Reviewing that decision de novo, the Ninth Circuit applied a three-factor test to determine whether to excuse VHT of the prefiling registration requirement, namely, (1) whether the claimed lack of exhaustion of prefiling requirements is “wholly collateral” to the substantive claims of copyright infringement, (2) whether there is a “colorable showing of irreparable harm,” and (3) whether “exhaustion would be futile.” First, the Ninth Circuit found the registration requirement to be “wholly collateral to whether Zillow infringed on VHT’s copyright,” noting that copyright protection exists upon a work’s creation, not upon its registration. Second, the court found that VHT would be irreparably harmed if its suit was dismissed with prejudice, as a newly filed lawsuit would be time barred. The court also found that VHT had complied with the then-existing requirement of merely submitting its copyright registration applications prior to filing suit, and held that “[t]o impose a new registration timeline after years of discovery, reliance on circuit precedent, a jury trial, a bench trial and two appeals would be a judicial travesty and waste of resources.” Finally, the Ninth Circuit determined that excusing VHT from the prefiling requirement would not undermine the purpose of the prefiling registration requirement because the registrations of VHT’s photos had long since issued during the pendency of this case. Accordingly, the Ninth Circuit affirmed the district court’s excusal of VHT’s compliance with the prefiling registration requirement under Section 411(a).

A second issue on appeal was whether VHT’s photos constituted a single compilation under the Copyright Act, or whether each of the 2,700 photos at issue was considered a separate work. The question bore significance here because the answer would determine whether VHT is entitled to a single award of statutory damages in an amount between $750 and $30,000 or 2,700 statutory damage awards in that range. Zillow argued that VHT’s photos are a compilation because they are part of VHT’s master photo database, which the Copyright Office determined to be a compilation. While VHT group-registered its images as compilations, it also registered the individual images in its database and licensed the photos on an individual basis. The Ninth Circuit rejected Zillow’s argument that, because the photos were registered as a compilation, they were part of a compilation and only eligible for one award of statutory damages, finding that the argument “elevates the form of registration above all else,” a conclusion the Ninth Circuit and other courts had previously rejected. The Ninth Circuit noted that VHT licensed the individual photos and not the compilation itself; that Zillow used and infringed individual photos and not the entire database or “any selection, coordination, or arrangement of the photos from the database” constituting a compilation; and that “[t]he photos had independent economic value separate from the database.” A history of the Copyright Office’s guidance on the registration of large groups of photographs like those owned by VHT indicated that at the time of the infringement, the method used by VHT to register its database of images was endorsed by the Copyright Office. Based on these facts, the Ninth Circuit held that each of the 2,700 photos at issue constituted an infringed work and that VHT was entitled to recover a statutory damage award for each photograph. 

Lastly, the court considered VHT’s appeal arguing that the district court exceeded its mandate following the earlier remand when it conducted a new bench trial after the Ninth Circuit vacated the jury’s finding of willfulness and, as a result of that new trial, reduced the amount of VHT’s damages. The Ninth Circuit rejected VHT’s appeal, noting that, following its vacature of the jury’s finding of willfulness as to certain infringed photos, it held that “[a] new trial was necessary to determine the status of the photos and to consider the appropriate statutory award.” Accordingly, the Ninth Circuit affirmed the district court’s decision to hold a new bench trial to assess damages.

Summary prepared by Tal Dickstein and Kyle Petersen

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