Wednesday, April 17, 2024

Zillow must pay VHT $2M for listing photos, appeals court affirms

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Unless the companies decide to take their case to the U.S. Supreme Court and the court opts to take it, this is the end of the road for a legal saga that began eight years ago over the fate of sold listing photos.

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An appeals court has affirmed a lower-court ruling ordering real estate behemoth Zillow to pay real estate photography company VHT Studios about $2 million in damages for the copyright infringement of thousands of VHT’s photographs on its website.

Unless the companies decide to take their case to the U.S. Supreme Court and the court opts to take it — which is extremely unlikely for any case — this is the end of the road for a legal saga that began eight years ago over the fate of sold listing photos.

VHT first filed suit against Zillow in July 2015, alleging the listing giant had ripped off its intellectual property by illegally using VHT’s photos on its home improvement webpage, Zillow Digs. At the time, VHT counted more than 75,000 real estate professionals nationwide among its customers.

On Wednesday, a panel of three judges of the 9th U.S. Circuit Court of Appeals, faced with the case a second time around, rejected arguments from both Zillow and VHT that the lower court had erred in awarding Zillow about $2 million in damages.

Zillow argued that VHT had failed to satisfy a copyright registration requirement whose statute of limitations had passed and therefore its claims should be dismissed. The court disagreed with that argument, in part because copyright protection begins as soon as a work is created, rather than when it is registered with the U.S. Copyright Office.

Zillow also argued that VHT’s photos, as a registered compilation, should only count as “one work” and therefore entitled VHT to only one award of statutory damages, but the appeals court didn’t buy that either.

“Here, the individual photos were created at the request of a listing agent or broker, then licensed and published to that agent or broker for marketing an individual listing,” the order reads.

“VHT licensed the individual photos in the database, not the database itself. The database itself was not published. Rather, Zillow used each photo independently to market home designs. Zillow selected photos based on the content of the images: It sought ‘photos of artfully-designed rooms’ for its Digs platform. It was not selecting on the authorship or arrangement of the photos within the database.

“Instead, it obtained images from feed providers based on the photos themselves. Zillow infringed the individual photos, not the database.”

Therefore the panel of judges held that each of the 2,700 photos Zillow had infringed “had independent economic value separate from the database and did not qualify as ‘one work.’”

VHT had asked the appeals court to find that the lower-district court didn’t have the authority to conduct a new trial to decide statutory damages, hoping to have a previous award of just over $4 million stand, but the appeals court nixed that argument.

The case has been a tumultuous one. According to the complaint, with the exception of one brokerage, VHT retains copyright for all photos taken by photographers on its behalf and licenses the photos to listing agents and brokers solely for marketing the specific pictured property or the company or agent representing the property — and only while that property is on the market.

On the other hand, Zillow told Inman at the time that it had abided by the terms of the licenses agreed to by the parties who provided the photos, including agents, brokers and multiple listing services. The company specified that it had used photos for Zillow Digs only if permitted by license.

In 2017, a jury ordered Zillow to pay more than $8 million in damages to the photo company, which Zillow successfully convinced a federal court to slash to just over $4 million later that year.

In 2018, appeals from both companies sent the case to the 9th U.S. Circuit Court of Appeals. In March 2019, the 9th U.S. Circuit Court mostly sided with Zillow, vacating the jury’s finding of “willful” infringement of 2,700 images and opting to send the case back to a lower-court judge to come up with a new monetary amount for damages.

In May 2020, VHT argued that the previous damages award should stand, but Zillow requested that the court either find its infringements innocent as a matter of law or order a new trial to decide on damages for the 2,700 images.

In March 2021, the court ordered a new trial and awarded VHT a total statutory damages award of $1,927,200. This was on top of the $3,867.64 in damages awarded in the 2017 trial for direct infringement of an additional 1,221 images. The court also awarded VHT post-judgment interest on the full amount of the damages from the 2017 ruling through the date of payment.

Inman has reached out to Zillow and VHT for comment and will update this story if responses are received.

Email Andrea V. Brambila.

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