Addressing the use of third-party photographs on a real estate listing website, the United States Court of Appeals for the Ninth Circuit found no direct copyright infringement, despite displaying thousands of photographs protected by copyright. VHT, Inc. v. Zillow Group, Inc., Case No. 17-35587, -35588 (9th Circ. Mar. 15, 2019) (McKeown, J). The Court also found that making the photographs searchable was not transformative and therefore did not support a defense of fair use.
Real estate brokers, agents and listing services hire VHT to take professional photos of new real estate listings for marketing purposes. VHT takes the photos, edits them, saves them in the studio’s database and then delivers them to its customers for licensed use. The license authorizes the use of the photos in connection with the sale of the property. Zillow used the VHT photos to display images of current and expired real estate listings on its real estate website, known as the Listings Platform. Zillow also used the photos on its Digs website, which focuses on home improvement and interior design.
In 2015, VHT sued Zillow for copyright infringement, alleging that Zillow’s use of the photos on its SEO platform and Digs sites exceeded the scope of the licenses VHT provided to its licensees who, to their turn, provided the photos to Zillow. VHT alleged that Zillow directly infringed its copyright by posting photos after the property was sold. Zillow argued that it received the photos through feed providers who said they had full authority to grant rights to Zillow that would allow it to use the photos without infringing on Zillow’s intellectual property rights. third. VHT alleged that Zillow designed its software to cause the photos to be reproduced after sale on the listing platform.
The district court found that Zillow did not engage in willful conduct and therefore did not directly infringe VHT’s copyrights by posting more than 54,000 photos on its listing platform. He also granted Zillow partial summary judgment of non-infringement. On other claims of direct, indirect, and willful infringement for Zillow’s use of photos on Digs, a jury found in favor of VHT and awarded $8.27 million in damages. The district court, however, reversed part of the jury’s verdict on the majority of the photos and reduced the total damages to approximately $4 million. VHT appealed the finding of no infringement relating to the registration platform, and Zillow appealed the finding of infringement relating to Digs.
On appeal, the Ninth Circuit agreed with the district court, finding that Zillow did not directly infringe VHT’s copyrights by using the photos on its listing platform. The Court emphasized that direct copyright infringement requires active participation in the infringement. Because VHT has not demonstrated that Zillow exercised any control over the material, selected any material for transmission, or encouraged copying or distribution of the photos, it could not be held liable for direct infringement.
Zillow claimed that the fair use defense shielded it from liability over the remaining photos for which it was found responsible on its Digs site, arguing that Digs’ search functionality constitutes fair use. At issue was whether Zillow’s tagging of 3,921 VHT photos for a search feature on Digs was transformative and therefore supported a finding of fair use. The Ninth Circuit rejected Zillow’s argument, noting that making the images searchable did not fundamentally change their original purpose when produced by VHT, which was to artfully depict rooms and properties. Finding limited transformation, the Court upheld the district court’s grant of summary judgment.
Regarding damages, the Court concluded that there remained a question of whether the photos were a compilation or whether each individual photo was entitled to separate compensation. Since there were thousands of photos and there was no explicit ruling on the compilation, the Court sent the matter back to the lower court for determination.