IP Law Daily, COPYRIGHT—9th Cir.: VHT will keep its $2 million award against Zillow, (Jun 8, 2023)

By Matthew Hersh, J.D.

The photographs in the real estate studio’s database were considered individually for statutory damages purposes

The owner of a database of real estate photographs that prevailed in a copyright infringement lawsuit was entitled to statutory damages as to every single one of those photographs because each photograph was capable of “living its own copyright life,” the U.S. Court of Appeals for the Ninth Circuit has held. The court, in its second encounter with the long-running copyright infringement matter, also cleared up important open questions about the application of the pre-lawsuit requirement of registration and the impact of making a group, as opposed to an individual, registration with the Copyright Office (VHT, Inc. v. Zillow Group, Inc., June 7, 2023, McKeown, M.).

The lawsuit, which is by now well familiar to the Ninth Circuit as well as the federal district court in Seattle where the case originated, involves a pitched battle between two companies in the real estate business. VHT, a photography studio, markets professional real estate photos for agents and brokers. Zillow aggregates various listings of rental and for sale properties—including some of the photos included in those listings—and makes those listings available direct to consumers. But many of the photos hosted on Zillow, the real estate photo studio contends, were taken from it without permission.

VHT sued Zillow for copyright infringement in the Seattle court. The lawsuit then went through an effective roller coaster of litigation. After a February 2017 trial, a federal found for VHT and awarded $8.2 million—a figure that the court then reduced by half in a post-trial ruling. The Ninth Circuit then affirmed the decision in part, but remanded to the district court to take a second look at statutory damages. The district court, in succession, found once again that VHT was eligible for statutory damages, refused to certify that ruling for interlocutory appeal, and then, after presiding over a new trial, awarded VHT a mere $2 million in damages.

Both parties appealed, bringing the case once again before the Ninth Circuit.

Timing of the registration. The court of appeals first found that VHT’s late filing of copyright registrations for the photos in suit was no bar to recovery. The issue involved a knotty problem of statutory and jurisdictional issues in a changing legal landscape. In order to bring a copyright infringement lawsuit, the copyright owner must first register its works with the Copyright Office. VHT applied for registration before bringing its lawsuit, but the registration was not granted until after the lawsuit. At the time of the trial below, this was no problem, because Ninth Circuit caselaw held that a party had effectively registered—at least as far as the lawsuit threshold was concerned—at the time of the initial registration filing. But 11 days before the Ninth Circuit’s opinion in this case, the Supreme Court overturned that precedent in Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 139 S. Ct. 881 (2019), and found that a copyright owner could not file suit until the Office had granted the registration. Did that bar VHT’s claim here? The district found that it did not, and the court of appeals agreed.

The opinion in Fourth Estate did not preclude VHT’s lawsuit, the court of appeals held, for several reasons. First, the court noted, the pre-filing registration was a statutory requirement—akin to an administrative exhaustion requirement—but not a jurisdictional bar that would preclude a court from hearing the case. (That much had been confirmed by the Supreme Court many years earlier in Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 169 (2010).) So the trial court was free to excuse the procedural shortcoming if it wished. And the trial court made a reasonable decision, the court of appeals reasoned, to do so. For one thing, the court noted, copyright protection runs “from the work’s creation, not from registration.” So it is not as if VHT had no rights to claim at the time it sued. Second, the court observed nothing would be meaningfully gained by requiring VHT to go back to the starting line. To impose a new registration timeline “after years of discovery, reliance on circuit precedent, a jury trial, a bench trial and two appeals,” the court emphasized, “would be a judicial travesty and waste of resources.” Finally, the court noted, VHT’s failure to exhaust administrative remedies had no meaningful impact. The Copyright Office eventually approved the registration, and it declined an opportunity to enter the case. There was no reason to start over.

Statutory damages. The court of appeals also affirmed the district court’s decision on statutory damages. The question here was whether the nearly 3,000 photos at issue constituted individual works or a single “compilation” of works—“[a] question [] of deep monetary consequence to the parties” because statutory damages are multiplied by the number of works. The district court found that the works were not part of a compilation, and the court of appeals agreed.

The photographs were not part of a compilation, the court of appeals held, because each photo could be viewed as “a separate, independent work.” The central issue, the court held, was whether the individual photographs could be seen as having a separate economic value—that is, as the Seventh Circuit had held in Sullivan v. Flora, Inc., 936 F.3d 562, 572 (7th Cir. 2019) (recently covered by IP Law Daily here) whether each photo “lives its own copyright life.” In this case, the court of appeals concluded, the photos at issue clearly did. The record showed, the court observed, that VHT licensed the photos on a per-image or per-property basis, rather than licensing the database itself. Thus, the court reasoned, “the pictorial works lived their own copyright lives, and value came from each photo’s individual content rather than their assembly within the database.”

Nor did it matter, the court of appeals concluded, that the works had been registered as a single group under Copyright Office administrative regulations. To be sure, the court noted, the Copyright Office had cautioned, in its Compendium of U.S. Copyright Office Practices, that “registering photographs as part of a photographic database may limit the copyright owner’s ability to seek certain remedies in an infringement action as all the parts of a compilation . . . constitute one work.” But the Compendium was hardly binding as a matter of law, and it was a misread in any event of earlier Ninth Circuit precedent. Moreover, the court of appeals noted, if database registration alone automatically limited a holder to one infringement award, the Copyright Office would be inundated with applications—or, worse, “copyright holders would give up on registration and never be able to protect their creative and monetary investments.” There was no reason to elevate the form of the registration over the substance of the works.

The Case is No. 22-35147.

Attorneys: Stephen M. Rummage and Eric M. Stahl (Davis Wright Tremaine LLP) for VHT, Inc. Ian B. Crosby, Jenna G. Farleigh and Emily A. Parsons (Susman Godfrey LLP) for Zillow Group, Inc., and Zillow, Inc.

Companies: VHT, Inc.; Zillow Group, Inc.; Zillow, Inc.

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