VHT, Inc. v. Zillow Grp.
| Decision Date | 26 January 2022 |
| Docket Number | C15-1096JLR |
| Parties | VHT, INC., Plaintiff, v. ZILLOW GROUP, INC., et al., Defendants. |
| Court | U.S. District Court — Western District of Washington |
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This matter was tried to the court on the parties' briefing and oral closing arguments. The parties also filed proposed findings of fact and conclusions of law and proposed judgments. (See VHT F&C (Dkt. # 381); VHT Prop. J. (Dkt. # 382); Zillow F&C (Dkt. # 383) Zillow Prop. J. (Dkt. # 385.) At issue is whether Defendants Zillow Group, Inc. and Zillow, Inc.'s (collectively, “Zillow”) infringement of 2, 700 of Plaintiff VHT, Inc.'s (“VHT”) images on its Digs website was innocent, and the amount of statutory damages to which VHT is entitled for that infringement. The court has considered the parties' briefing, the exhibits admitted into evidence, the arguments of counsel, and the parties' proposed findings of fact and conclusions of law. Being fully advised, and pursuant to Federal Rule of Civil Procedure 52(a), the court (1) finds that Zillow's infringement of 388 of VHT's images prior to July 10, 2014 was innocent; (2) finds that Zillow's infringement of 2, 312 of VHT's images after July 10, 2014 was not innocent; and (3) awards VHT statutory damages totaling $1, 927, 200.
This action arises from Zillow's use of VHT's copyrighted real estate photos on its Digs website and is before the court following remand by the Ninth Circuit Court of Appeals. See VHT, Inc. v. Zillow Grp., Inc., 918 F.3d 723, 730 (9th Cir.), cert. denied, 140 S.Ct. 122 (2019).
This case was originally tried to a jury between January 23, 2017, and February 9, 2017. (See generally Dkt.) Relevant to the issues currently before the court, the jury found that (1) Zillow directly infringed 28, 125 of VHT's images it were used on Digs (Verdict Form (Dkt. # 281) at 1-2); (2) 19, 132 of VHT's images had independent value (id. at 5); (3) VHT was entitled to $2.84 in actual damages per infringed image (id. at 4); (4) Zillow willfully infringed 3, 373 of VHT's images and was liable to VHT for $1, 500 in statutory damages per willfully infringed image (id. at 6); and (5) Zillow innocently infringed 15, 939 of VHT's images and was liable to VHT for $200 in statutory damages per innocently infringed image (id.). The jury did not find that any of the images were neither willfully nor innocently infringed. (See generally id.) VHT elected to receive statutory damages in lieu of actual damages for those images that were eligible for statutory damages. (See Election (Dkt. # 286).)
After trial, Zillow moved for judgment notwithstanding the verdict or for a new trial. (See JNOV Mot. (Dkt. # 301).) The court upheld the jury's verdict that Zillow directly infringed VHT's copyright in searchable images that had been displayed on Digs, including the 2, 700 images at issue in this bench trial. (6/20/17 Order (Dkt. # 315) at 46.) The court also upheld the jury's verdict that Zillow's infringement of these images was willful. (Id.) The court, however, reversed the jury's verdict that Zillow had infringed images that were nonsearchable and granted a new trial on VHT's indirect copyright infringement claims as to 114 of VHT's images. (Id.) On June 27, 2017, the parties stipulated and agreed to waive their rights to file motions for costs and for attorney's fees and to the dismissal without prejudice of VHT's indirect copyright infringement claims as to the 114 images for which the court had granted a new trial. (See 6/27/17 Joint Sub. (Dkt. # 316).) The court entered final judgment on July 10, 2017. (See 7/10/17 J. (Dkt. # 322).)
The parties filed cross-appeals. See VHT, 918 F.3d at 730. Relevant to the issues currently before the court, the Ninth Circuit reversed the court's denial of judgment notwithstanding the verdict on the issue of willfulness as to the 2, 700 images for which the court had affirmed the jury's verdict; vacated the jury's finding of willful infringement of those images; and remanded for consideration of whether VHT's photos ORDER used on Zillow's Digs site were part of a compilation or were individual “works” under the Copyright Act. Id. at 747-50. Whether Zillow's infringement of the 2, 700 images at issue in this case was innocent was not before the Ninth Circuit. See generally id.
After remand, this court held, in relevant part, that VHT's images that Zillow used on Digs did not constitute a “compilation” within the meaning of 17 U.S.C. § 101 and therefore did not comprise a single “work” for purposes of calculating statutory damages under 17 U.S.C. § 504(c). (5/8/2020 Order (Dkt. # 347) at 25-35.) The court ordered the parties to submit a joint statement regarding the parties' positions as to the remaining issues left for adjudication and a proposed amended judgment. (Id. at 36.) After reviewing the parties' joint statement, the court held that a new trial was necessary to determine (1) whether or not Zillow's infringement of the 2, 700 images for which the Ninth Circuit vacated the jury's willfulness finding was innocent and (2) the measure of statutory damages. (3/10/21 Order (Dkt. # 351) at 12.)
The parties subsequently agreed that these issues would be tried to the bench based on briefing, oral argument, and testimony and evidence admitted at the previous jury trial. (See 8/12/21 Order (Dkt. # 359) (granting the parties' stipulated motion regarding trial procedure).) The parties submitted briefing, and the court heard closing arguments on December 14, 2021. (See 12/14/21 Min. Entry.) After oral argument, the parties submitted proposed findings of fact and conclusions of law and proposed judgments. (See VHT F&C; VHT Prop. J.; Zillow F&C; Zillow Prop. J.) Being fully advised, and pursuant to Federal Rule of Civil Procedure 52(a), the court now makes the following findings of fact and conclusions of law.[1]
1. VHT is a Delaware corporation with its principal place of business in Rosemont, Illinois. (Trial Ex. 600 ¶ 1.) Its primary business involves the creation and curation of photographs of residential real properties listed for sale, and its primary source of revenue is the licensing of those photographs to real estate brokers and agents. (Id. ¶ 2; Balduf Tr. (Dkt. # 290) at 67:23.)
2. VHT has a network of professional real estate photographers. (Trial Ex. 600 ¶ 7.) 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 its network to shoot photographs of that property. (Id. ¶ 8.) VHT owns valid copyrights in the photographs that are the subject of this action and therefore has the exclusive right to reproduce and display them. (Id. ¶ 9); see 17 U.S.C. § 106.
3. VHT's service level agreements and terms of use grant its customers the right to use the images in connection with selling or marketing a specific property. Its licenses to larger brokerage firms also grant the right to use the images to market the agent representing the property. VHT's licenses do not permit any other use without VHT's express permission. (Trial Exs. 7, 476 (service level agreements); 2 (terms of use); Balduf Tr. at 77:19-80:23, 83:25-84:20, 86:18-87:25).)
4. Zillow operates the largest real estate website in the United States. (Acker Tr. (Dkt. # 291)[2] at 177:14-17). It owns and maintains a database which, at the time of the parties' 2017 trial, contained information about more than 110 million homes in the United States. (Trial Ex. 600 ¶ 10.)
5. Zillow's managers and executives have substantial experience with copyright and the licensing of content for its website. (See, e.g., Samuelson Tr. (Dkt. # 294) at 131:11-18; Acker Tr. (Dkt. # 291) at 177:10-17; 178:10-180:12; Schwartz Tr. (Dkt. # 293) at 6:15-57:10.)
6. Zillow obtains images used on its websites through feed agreements with hundreds of Multiple Listing Services (“MLSes”) and thousands of real estate brokers and agents. (Acker Tr. (Dkt. # 292) at 32:21-33:8.) It receives between three and five million photos every day through these feeds. (Gurney Tr. (Dkt. # 292) at 120:13-16.)
7. Zillow's agreements with its feed providers grant it an express license to use, copy, distribute, publicly display, and create derivative works for each photo, and the agreements include unambiguous representations by the feed providers that they have the authority to assign such rights. VHT, 918 F.3d at 749;[3] (see also Trial Ex. A-77 ¶ 3 (); id. ¶ 4 ()). The feed providers further promised to indemnify Zillow against claims of third parties arising from the provider's breach of its warranty that it is able to assign these rights. (Trial Ex. A-77 ¶ 4.)
8. The feed agreements also specify whether Zillow's right to use the photos is temporally limited. Zillow characterizes as “evergreen” photos from feed agreements that grant a right to display an...
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