VHT, Inc. v. Zillow Grp., Inc.

• Decision Date: 08 May 2020
• Docket Number: CASE NO. C15-1096JLR
• Citation: 461 F.Supp.3d 1025
• Parties: VHT, INC., Plaintiff, v. ZILLOW GROUP, INC., et al., Defendants.
• Court: U.S. District Court — Western District of Washington

461 F.Supp.3d 1025

VHT, INC., Plaintiff,

v.ZILLOW GROUP, INC., et al., Defendants.

CASE NO. C15-1096JLR

United States District Court, W.D. Washington, at Seattle.

Signed May 8, 2020

Marcia Beth Paul, Pro Hac Vice, Davis Wright Tremaine LLP, New York, NY, Stephen M. Rummage, Eric M. Stahl, James E. Howard, Max Bamberger Hensley, Davis Wright Tremaine, Seattle, WA, for Plaintiff.

Edgar Guy Sargent, Genevieve Vose Wallace, Ian B. Crosby, Jenna Farleigh, Jordan Connors, Susman Godfrey, Seattle, WA, for Defendants.

ORDER ON THE PARTIES’ CROSS-MOTIONS

JAMES L. ROBART, United States District Judge

I.INTRODUCTION

Before the court are: (1)DefendantZillow Group, Inc., and Zillow, Inc.’s (collectively, "Zillow" or "Defendants")motion for judgment on the pleadings, or in the alternative, partial summary judgment (Zillow Mot. (Dkt. # 339)); and (2)PlaintiffVHT, Inc.’s ("VHT")cross-motion for partial summary judgment(VHT Mot. (Dkt. # 343).)¹Both motions are opposed.(See VHT Mot.; Zillow Reply (Dkt. # 345).)²The court has considered the motions, the parties’ submissions in support of and in opposition to the motions, the relevant portions of the record, and the applicable law.Being fully advised,³the court construes Zillow's motion for judgment on the pleadings as a portion of Zillow's motion for partial summary judgment, DENIES Zillow's motion for partial summary judgment, and GRANTS VHT's motion for partial summary judgment.

II.BACKGROUND

A.Factual Background

1.VHT's and Zillow's Businesses

This action arises from Zillow's use of VHT's copyrighted real estate photographs.(SeePTO (Dkt. # 244)at 2-3;Ex. 600(Dkt. # 272)¶ 2.)VHT is a real estate photography company that commissions photographs from professional photographers.(10/25/16Hensley Decl. (Dkt. # 140)¶ 2, Ex.A ("Balduf Dep.")at 20:13-15;id.¶ 3, Ex. B ("Bosch Dep.")at 39:6-9, 51:9-52:8;id.¶ 15, Ex. N ("VHT Contractor Agmt.") at VHT005555-58.)VHT creates and curates photographs of residential real estate properties listed for sale and the licenses those photographs to real estate brokers and agents.(PTOat 5.)VHT's clients, which include real estate brokerages and real estate agents, use VHT's photographs to market their properties and listings.(BaldufDep. at 20:18-21:2.)When a broker or agent requests that VHT obtain and license photos of a residential real estate property, VHT dispatches one of the photographers in the VHT Photographer Network to shoot photographs of that property.(Id. )VHT maintains its photographs in a database and licenses the photographs in its database either collectively or individually to third parties.(TAC (Dkt. # 123)¶ 23.)A typical shoot results in approximately 16 photographs of a property.(Id.¶ 27.)Customers pay on either a per-property or per-photograph basis.(Id. )

Zillow operates Zillow.com, a large real estate website.(10/25/16Kutner Decl. (Dkt. # 130)¶ 2.)Since February 2013, Zillow's website has included a content area called Zillow "Digs," which is themed around the topic of home design and renovation.(Id.;see generally TAC.)Digs "includes a searchable set of images of home interiors classified by room type and tagged with information about the room contents, as well as ‘boards’ where users can save and share images they are interested in."(10/25/16KutnerDecl. ¶ 4.)

Zillow obtains the photographs that it uses on Digs from two main sources: (1) public records; and (2) real estate listings received from agents, brokers, and Multiple Listing Services ("MLSs").(Id.¶ 5.)Zillow contracts with each agent, broker, and MLS to clarify the terms under which Zillow may use the contents of each listing.(Id. )Some of those contracts restrict how Zillow may use the photos after a property is sold; Zillow calls these contracts "deciduous."(Id.¶ 6.)However, the majority of the contracts are "evergreen," meaning they do not restrict Zillow's ability to use data or images after a property sells.(Id. )

2.Zillow's Use of VHT's Images

In this lawsuit, VHT alleges that Zillow infringed upon 28,125 of VHT's photographs ("the VHT Photos").(SeePTOat 2-3;Ex. 600 ¶¶ 6, 9-10; Summ. Image SS (Dkt. # 256-1);Final JIs (Dkt. # 275)at 20.)Zillow used 28,124—all but one—of the VHT Photos in conjunction with the Digs section of Zillow's website.(See Summ. Image SS;Ex. 600 ¶ 11;Ex. 512 at Column N.)Zillow also used one of those 28,124 VHT Photos in an email.(1/27/17Trial Tr. (Dkt. # 291)at 98-100, 112;Ex. 293;Ex. 512 at Row 17,744, Column AV.)⁴Zillow used the final VHT Photo exclusively in a blog post.(1/27/17Trial Tr.at 100, 112;Ex. 243;Ex. 512 at Row 28,127, Column AV.)⁵

B.Procedural Background

1.VHT's Copyright Applications and Registrations

VHT maintains its images in a database.(SeeRummage Decl. (Dkt. # 344)¶ 2, Ex. A.) On a quarterly basis, VHT registers its images with the United States Copyright Office(the "Copyright Office") through a group registration procedure that allows large volumes of photographs to be registered using a single form.(Seeid.Exs. 1-9.)

VHT filed this lawsuit on July 8, 2015.(Seeid. )At the time VHT filed its initial complaint, it had filed applications to register photographs in its database created from the beginning of 2010 through the end of the first quarter of 2015.(Id. )Attached to VHT's initial complaint are copies of nine applications VHT has submitted as of the time of its initial complaint.(Seeid.¶ 27, Exs. 1-9.)

Zillow answered VHT's initial complaint on August 27, 2015.(See Answer (Dkt. # 22).)On September 22, 2015, the Copyright Office rejected eight of VHT's ten pending applications for failure to establish the element of "compilation authorship" required for the form of registration that VHT had chosen.(SeeCrosby Decl. (Dkt. # 340)¶ 3, Ex. 2 at TX405.)On that basis, the Copyright Office refused to register VHT's images and closed its files.(Id. )VHT asked the Copyright Office to reconsider its decision in a December 14, 2015, letter.(SeeCrosbyDecl. ¶ 2, Ex. 1 at TX 244.005.)On June 30, 2016, the Copyright Office granted VHT's request to reconsider its determination.(SeeCrosbyDecl. ¶ 4, Ex. 3 at TX 365.002.)

VHT amended its complaint three times.(See FAC (Dkt. # 53); SAC (Dkt. # 105); TAC.)By mid-2016, the Copyright Office had reconsidered and approved 11 of VHT's registrations.(SeeRummageDecl. ¶ 2, Ex. A.) VHT filed its third amended complaint on October 24, 2016, and attached to it the relevant Copyright Office registrations.(SeeTAC ¶ 30, Ex. 15.)Each registration states that it is a "group registration for VHT, Inc. database" along with corresponding dates.(Seeid. )Each registration further states: "Basis of registration: compilation of photographs added to revised database."(Seeid. )Listed as the "derivative work or compilation" is "[p]reviously published photographs" and under "material added to this work" is "[c]ompilation of photographs in unpublished database and photographs contained in the database."(Id. )The effective date for five of the registrations was July 8, 2015; the rest have an effective date of January 27, 2016.(Seeid. )

2.Pretrial Motions

On October 25, 2016, Zillow moved for summary judgment on all five of VHT's copyright infringement claims.(See Zillow MPSJ (Dkt. # 129).)VHT cross-moved for partial summary judgment as to liability on its copyright infringement claims and sought summary judgment on Zillow's four counterclaims.(See VHT MPSJ (Dkt. ## 137 (redacted); 141 (sealed)).)The court granted in part and denied in part the parties’ motions.(SeeMSJ Order (Dkt. # 211)at 50.)The court granted VHT summary judgment on Zillow's counterclaims, granted Zillow summary judgment on VHT's infringement claims with respect to Zillow's home details pages on its listing website, denied Zillow summary judgment on VHT's infringement claims with respect to Zillow's use of Digs, and made several other rulings.(Seeid. at 32, 38-41.)

3.The Compilation Issue

At trial, Zillow asked the court to determine whether 17 U.S.C. § 504(c)(1) limits VHT to a single award of statutory damages for all infringements of any number of images that VHT registered under an express claim of compilation in a single database.(SeeProp. PTO (Dkt. # 218)at 6.)Under 17 U.S.C. § 504(c)(1), a party may elect to recover statutory damages instead of actual damages for copyright infringement.17 U.S.C. § 504(c)(1).A party that does so is entitled to a statutory damages award of between $750.00 and $30,000.00 "with respect to any one work."Id.For the purposes of statutory damages, "all the parts of a compilation or derivative work constitute one work."Id.In other words, if VHT's images constitute a single "compilation," then the images by definition constitute a single "work," and VHT would be entitled on a single award of statutory damages for Zillow's infringement of any or all of the images.On the other hand, if each image is a separate work, VHT would be entitled to statutory damages on a per-image basis.

The court initially declined to rule on the question of whether VHT would be entitled to statutory damages on a per-image basis.(See2/7/17 Trial Tr. (Dkt. # 294)at 12.)Prior to issuing final jury instructions, the court ruled that VHT was entitled to a separate award of statutory damages for each image that has independent economic value.(Seeid. at 13.)The court relied on Columbia Pictures Television v. Krypton Broad. of Birmingham, Inc. , 106 F.3d 284, 292(9th Cir.1997)(" Columbia Pictures I "), rev'd sub nom.Feltner v. Columbia Pictures Television, Inc. , 523 U.S. 340, 118 S.Ct. 1279, 140 L.Ed.2d 438(1998) ).(See2/7/17Trial Tr.at 13.)Based on Columbia Pictures I and its progeny, the court determined that "the proper test to apply in analyzing whether each component is a separate work for purposes of statutory damages is whether each component has independent economic value."(S...