Vht, Inc. v. Zillow Group, Inc.

Rule of Law:

An online service provider engages in direct copyright infringement only when it engages in volitional conduct that is the proximate cause of the infringement, such as actively selecting and curating content, not when its automated system passively displays content provided by third parties.

Facts:

• VHT, Inc. is a professional real estate photography studio that licenses its photos to real estate brokers, agents, and listing services for the purpose of marketing properties for sale.
• Zillow Group, Inc. operates an online real estate marketplace with a main "Listing Platform" and a separate home design feature called "Digs."
• Zillow received VHT's photos for its Listing Platform through automated data feeds from third-party brokers and agents.
• Zillow's agreements with these third-party feed providers included representations that the providers had all necessary rights to grant Zillow a license to use the photos on its platform.
• For its "Digs" feature, Zillow employees manually selected specific, high-quality photos from the platform, tagged them with searchable metadata (e.g., room type, style, color), and displayed them to users for home design inspiration.
• VHT sent Zillow a single takedown notice letter that identified thousands of allegedly infringing photos by their street address, not by their unique web address (URL) or Zillow Image ID.
• In response to the notice, Zillow requested VHT's license agreements with the feed providers to evaluate the scope of rights, but VHT provided only an unsigned form contract before filing suit.

Procedural Posture:

• VHT, Inc. sued Zillow Group, Inc. in the U.S. District Court for the Western District of Washington for copyright infringement.
• The district court (a court of first instance) granted partial summary judgment to Zillow on direct infringement claims for photos on the Listing Platform, finding no volitional conduct.
• The district court also granted partial summary judgment to VHT, ruling as a matter of law that Zillow's searchable functionality on its 'Digs' feature was not a fair use.
• The remaining claims proceeded to a jury trial.
• The jury returned a verdict for VHT, finding Zillow directly infringed 28,125 photos and willfully infringed others, awarding over $8.27 million in damages.
• Zillow filed a post-trial motion for judgment notwithstanding the verdict (JNOV).
• The district court partially granted Zillow's JNOV, reversing the verdict on most of the photos, reversing on secondary liability, but upholding liability for 3,921 searchable Digs photos, and reducing total damages to approximately $4 million.
• Both Zillow, as appellant, and VHT, as cross-appellant, appealed various rulings of the district court to the U.S. Court of Appeals for the Ninth Circuit.