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FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
VHT, INC., a Delaware corporation, Nos. 17-35587
Plaintiff-Appellee/ 17-35588
Cross-Appellant,
v. D.C. No.
2:15-cv-01096-
ZILLOW GROUP, INC., a Washington JLR
corporation; ZILLOW, INC., a
Washington corporation,
Defendants-Appellants/ OPINION
Cross-Appellees.
Appeal from the United States District Court
for the Western District of Washington
James L. Robart, Senior District Judge, Presiding
Argued and Submitted August 28, 2018
Seattle, Washington
Filed March 15, 2019
Before: M. Margaret McKeown, William A. Fletcher, and
Ronald M. Gould, Circuit Judges.
Opinion by Judge McKeown
2 VHT, INC. V. ZILLOW GROUP
SUMMARY *
Copyright Law
The panel affirmed in part and reversed in part the
district courtâs judgment after a jury trial and remanded in a
copyright infringement action brought by VHT, Inc., a real
estate photography studio, against Zillow Group, Inc., and
Zillow, Inc., an online real estate marketplace.
VHT alleged that Zillowâs use of photos on the âListing
Platformâ and âDigsâ parts of its website exceeded the scope
of VHTâs licenses to brokers, agents, and listing services that
provided those photos to Zillow. The district court granted
partial summary judgment on a limited set of claims. The
jury found in favor of VHT on most remaining claims,
awarding over $8.27 million in damages. The district court
partially granted Zillowâs post-trial motion for judgment
notwithstanding the verdict, reversing in part the jury verdict
and reducing total damages to approximately $4 million.
The panel affirmed the district courtâs summary
judgment in favor of Zillow on direct infringement of the
Listing Platform photos. The panel held that VHT failed to
establish that Zillow engaged in volitional conduct by
exercising control over the content of the Listing Platform.
With respect to direct liability on the Digs photos, the
panel affirmed the district courtâs grant in favor of Zillow of
judgment notwithstanding the verdict on 22,109 non-
displayed photos and 2,093 displayed but not searchable
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
VHT, INC. V. ZILLOW GROUP 3
photos. The panel held that VHT did not present substantial
evidence that Zillow, through the Digs platform, directly
infringed its display, reproduction, or adaption rights.
The panel upheld summary judgment in favor of VHT
on 3,921 displayed, searchable Digs photos. The panel held
that fair use did not absolve Zillow of liability because
Zillowâs tagging of the photos for searchable functionality
was not a transformative fair use.
The panel affirmed the district courtâs grant in favor of
Zillow of judgment notwithstanding the verdict on
secondary liability, both contributory and vicarious, on the
Digs photos.
As to damages, the panel remanded consideration of the
issue whether VHTâs photos used on Digs were part of a
compilation or were individual photos.
The panel reversed the district courtâs denial of judgment
notwithstanding the verdict on the issue of willfulness and
vacated the juryâs finding on willfulness. The panel
concluded that substantial evidence did not show that Zillow
was âactually awareâ of its infringing activity, nor that
Zillow recklessly disregarded or willfully blinded itself to its
infringement.
COUNSEL
Ian B. Crosby (argued), Edgar G. Sargent, Genevieve Vose
Wallace, and Jenna G. Farleigh, Susman Godfrey LLP,
Seattle, Washington, for Defendants-Appellants/Cross-
Appellees.
4 VHT, INC. V. ZILLOW GROUP
Stephen M. Rummage (argued), Marcia B. Paul, Jonathan
M. Lloyd, James E. Howard, and Max B. Hensley, Davis
Wright Tremaine LLP, Seattle, Washington, for Plaintiff-
Appellee/Cross-Appellant.
Keith Kupferschmid and Terry Hart, Copyright Alliance,
Washington, D.C.; Eleanor M. Lackman and Lindsay W.
Bowen, Cowan, DeBaets, Abrahams & Sheppard LLP, New
York, New York; for Amicus Curiae Copyright Alliance.
Alicia Calzada, Alicia Wagner Calzada, PLLC, San
Antonio, Texas, for Amici Curiae The American Society of
Media Photographers, Inc., Digital Media Licensing
Association, Inc., Graphic Artist Guild, Inc., and National
Press Photographers Association, Inc.
Thomas G. Hentoff and Chanakya A. Sethi, Williams &
Connolly LLP, Washington D. C., for Amici Curiae Disney
Enterprises, Inc., Twentieth Century Fox Film Corporation,
and Recording Industry Association of America, Inc.
Mitchell L. Stoltz, Electronic Frontier Foundation, San
Francisco, California, for Amicus Curiae Electronic Frontier
Foundation.
Brian M. Willen, Wilson Sonsini Goodrich & Rosati, P.C.,
New York, New York; Ryan T. OâHollaren, Wilson Sonsini
Goodrich & Rosati, P.C., Palo Alto, California; for Amici
Curiae Internet Association and Computer &
Communications Industry Association.
VHT, INC. V. ZILLOW GROUP 5
OPINION
McKEOWN, Circuit Judge:
Zillow, an online real estate marketplace, has become a
popular website for homeowners and others to check
estimated valuations of their property, look for houses and
condominiums for sale and rent, and see photographs of a
wide range of properties. Thousands of those copyrighted
photos come from VHT, the largest professional real estate
photography studio in the country.
The copyright claims on appeal concern Zillowâs use of
VHTâs photos on two parts of Zillowâs website: the âListing
Platformâ and âDigs.â The Listing Platform is the core of
the website, featuring photos and information about real
estate properties, both on and off the market. Zillow claims
that the site includes âmost homes in America.â Digs
features photos of artfully-designed rooms in some of those
properties and is geared toward home improvement and
remodeling. Zillow tags photos on the Listing Platform so
that Digs users can search the database by various criteria,
like room type, style, cost, and color.
Real estate brokers, listing services, and agents hire VHT
to take professional photos of new listings for marketing
purposes. A VHT photographer takes the photos and sends
them to the companyâs studio for touch-up, where they are
saved to VHTâs electronic photo database, and then
delivered to the client for use under license. Each license
agreement between VHT and its clients differs slightly, but
each contract generally grants the requesting client the right
to use the photos in the sale or marketing of the featured
property. Zillow receives these photos and other data in
feeds from various real estate-related sources.
6 VHT, INC. V. ZILLOW GROUP
In 2015, VHT sued Zillow Group, Inc., and Zillow, Inc.,
(collectively âZillowâ) for copyright infringement, alleging
that Zillowâs use of photos on the Listing Platform and Digs
exceeded the scope of VHTâs licenses to brokers, agents, and
listing services who provided those photos to Zillow. The
district court granted partial summary judgment on a limited
set of claims, while other claims advanced to trial. The jury
found in favor of VHT on most remaining claims, awarding
over $8.27 million in damages. The district court partially
granted Zillowâs post-trial motion for judgment
notwithstanding the verdict, reversing in part the jury verdict
and reducing total damages to approximately $4 million.
The parties cross-appealed issues stemming from partial
summary judgment, the jury verdict, and judgment
notwithstanding the verdict. We affirm in part and reverse
in part. 1
To simplify and make sense of the various claims, this
opinion does not split out the appeal and cross-appeal as was
done in the briefing to the court. Instead, the opinion
separately addresses liability for each of the categories of
photos at issue, followed by a discussion of damages. In
view of the multiple theories of liability and categories of
photos, following is an overview of the opinion.
1
In connection with these proceedings, we received amicus curiae
briefs from a broad array of interested parties, including nonprofit groups
and associations representing a diverse set of industry, technology, and
artistic interests. The briefs were helpful to our understanding of the
implications of this case from various points of view. We thank amici
for their participation.
VHT, INC. V. ZILLOW GROUP 7
I. Direct Infringement
A. Direct InfringementâListing Platform Photos
B. Direct InfringementâDigs Photos
1. Jury VerdictâDirect Infringement
2. Summary JudgmentâFair Use re Searchable
Photos
a. Background on Fair Use
b. Evolution of Search Engine Cases
c. Application of Fair Use Principles
II. Secondary InfringementâDigs
A. Contributory Liability
B. Vicarious Liability
III. Damages
A. Compilation
B. Willfulness
IV. Conclusion
ANALYSIS
The heart of this dispute is Zillowâs copyright liability
for use of VHT photos. VHT argues that Zillow directly
infringed its copyrighted photos, both those on the Listing
Platform and Digs. VHT also argues that Zillow indirectly
infringed through use of the photos on Digs. These claims
pertain to different images, focus on different features of
Zillowâs website, and have different procedural postures, so
we consider the various categories of photos separately.
I. Direct Infringement
VHTâs key claim is that Zillow is directly liable for
infringing VHTâs copyright on photos that were posted on
the Listing Platform and Digs. To prevail on a claim of
direct copyright infringement, VHT must establish
âownership of the allegedly infringed materialâ and that
Zillow âviolate[d] at least one exclusive right granted toâ
8 VHT, INC. V. ZILLOW GROUP
VHT under 17 U.S.C. § 106. A&M Records, Inc. v. Napster,
Inc., 239 F.3d 1004, 1013 (9th Cir. 2001). It is undisputed
that VHT is the copyright holder of the allegedly infringed
photos and therefore has the exclusive right to reproduce,
adapt, and display them. 2 17 U.S.C. § 106.
VHT must also establish causation, which is commonly
referred to as the âvolitional-conduct requirement.â See
Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 666 (9th
Cir. 2017). As we set out in Giganewsâdecided on the first
day of the VHT/Zillow trial and the closest circuit precedent
on pointââvolition in this context does not really mean an
act of willing or choosing or an act of decidingâ; rather, âit
simply stands for the unremarkable proposition that
proximate causation historically underlines copyright
infringement liability no less than other torts.â Id. (internal
citations omitted). Stated differently, âdirect liability must
be premised on conduct that can reasonably be described as
the direct cause of the infringement.â Id. (citation omitted).
This prerequisite takes on greater importance in cases
involving automated systems, like the Zillow website.
In addressing this concept, Justice Scalia noted that
â[e]very Court of Appeals to have considered an automated-
service providerâs direct liability for copyright infringement
has adopted [the volitional-conduct] rule.â Am. Broad. Cos.,
Inc. v. Aereo, Inc., 573 U.S. 431, 453 (2014) (Scalia, J.,
dissenting). 3 He went on to explain that while âmost direct-
2
VHT does not appeal the district courtâs finding that there was
insufficient evidence that Zillow violated VHTâs distribution rights.
3
Although the majority opinion in Aereo does not reference the
volitional-conduct requirement, Justice Scaliaâs dissent offers instructive
background on the doctrine. In Giganews, we embraced the principle
VHT, INC. V. ZILLOW GROUP 9
infringement casesâ do not present this issue, âit comes right
to the fore when a direct-infringement claim is lodged
against a defendant who does nothing more than operate an
automated, user-controlled system. . . . Most of the time that
issue will come down to who selects the copyrighted
content: the defendant or its customers.â Id. at 454â55
(internal citations omitted).
Giganews, Aereo, and out-of-circuit precedent counsel
that direct copyright liability for website owners arises when
they are actively involved in the infringement. ââ[T]he
distinction between active and passive participationââ in the
alleged infringement is ââcentralââ to the legal analysis.
Giganews, 847 F.3d at 667 (quoting Fox Broad. Co. v. Dish
Network LLC, 160 F. Supp. 3d 1139, 1160 (C.D. Cal. 2015)).
That âdirectâ infringement requires âactiveâ
involvement is hardly surprising, given the correlation
between the words âactiveâ and âdirect.â As the Fourth
Circuit held, â[t]here must be actual infringing conduct with
a nexus sufficiently close and causal to the illegal copying
that one could conclude that the machine owner himself
trespassed on the exclusive domain of the copyright owner.â
CoStar Grp., Inc. v. LoopNet, Inc., 373 F.3d 544, 550 (4th
Cir. 2004). By contrast, activities that fall on the other side
of the line, such as ââautomatic copying, storage, and
transmission of copyrighted materials, when instigated by
others, do[] not render an [Internet service provider] strictly
liable for copyright infringement[.]ââ Giganews, 847 F.3d at
670 (quoting CoStar, 373 F.3d at 555).
and held that it is âconsistent with the Aereo majority opinion,â which
left the requirement âintact.â 847 F.3d at 666â67.
10 VHT, INC. V. ZILLOW GROUP
In other words, to demonstrate volitional conduct, a party
like VHT must provide some âevidence showing [the alleged
infringer] exercised control (other than by general operation
of [its website]); selected any material for upload, download,
transmission, or storage; or instigated any copying, storage,
or distributionâ of its photos. Id. at 666, 670. VHT failed to
satisfy that burden with respect to either the photos on the
Listing Platform or on Digs.
A. Direct InfringementâListing Platform
Photos
VHT asserted that Zillow directly infringed the photos
displayed on the Listing Platform after a real estate property
was sold because VHTâs license agreements only authorized
use of those photos in relation to the sale of the property.
This claim, involving 54,257 non-searchable photos, was
resolved on summary judgment. The Listing Platform is the
core of Zillowâs online real estate marketplace. It features
photos and information about properties, which Zillow
receives through digital feeds from real estate agents,
brokerages, and multiple listing services, among others
(collectively âfeed providersâ).
Zillow has agreements with its feed providers granting it
an express license to use, copy, distribute, publicly display,
and create derivative works from the feed data on its
websites. Feed providers represent that they âha[ve] all
necessary rights and authority to enter intoâ the agreements,
and that âZillowâs exercise of the rights granted [t]hereunder
will not violate the intellectual property rights, or any other
rights of any third party.â
These agreements provide Zillow with either
âevergreenâ or âdeciduousâ rights in the photos provided
through the feeds. An evergreen right permits use of a photo
VHT, INC. V. ZILLOW GROUP 11
without any time restriction, âon and in connection with the
operation, marketing and promotion of the web sites and
other properties, owned, operated or powered by Zillow or
its authorized licensees.â By contrast, a deciduous right is
temporally limited: Zillow may use the photo when the real-
estate listing for its corresponding property is active, but
once the listing is removed (for example, when the property
sells), the photo must be taken down from Zillowâs websites.
To treat each photo consistently with its deciduous or
evergreen designation, Zillow developed automated
âtrumpingâ rules to determine which photos to display on the
Listing Platform.
VHT argues that Zillow âdesigned its system to . . .
cause[] the reproduction, display, and adaptation of VHT
photographs post-sale on the Listing Platform,â and âchose
to simply ignore VHTâs notices that post-sale use was
beyond the scope of VHTâs licenses.â The district court
granted summary judgment to Zillow, concluding that it did
not engage in volitional conduct and therefore did not
directly infringe VHTâs copyrights in 54,257 photos by
displaying them on the Listing Platform after a real estate
property was sold.
On de novo review, we agree with the district courtâs
analysis and affirm. Kelly v. Arriba Soft Corp., 336 F.3d
811, 817 (9th Cir. 2003). Although the district court did not
have the benefit of Giganews at the time of summary
judgment, its careful reasoning was prescient in invoking the
same principles.
Zillow did not engage in volitional conduct necessary to
support a finding of direct liability. The content of the
Listing Platform is populated with data submitted by third-
party sources that attested to the permissible use of that data,
12 VHT, INC. V. ZILLOW GROUP
and Zillowâs system for managing photos on the Listing
Platform was constructed in a copyright-protective way.
The feed providers themselves select and upload every
photo, along with the evergreen or deciduous designations,
that wind up on the Listing Platform. As a result, the photos
on the Listing Platform were not âselectedâ by Zillow. See
Giganews, 847 F.3d at 670. Nor did Zillow âexercise[]
controlâ over these photos beyond the âgeneral operation of
[its website].â Id. Zillow required feed providers to certify
the extent of their rights to use each photo. Consistent with
these designations, Zillowâs system classified each photo as
deciduous or evergreen and programmed its automated
systems to treat each photo consistently with that scope of
use certified to by the third party.
Further, when multiple versions of the same photo were
submitted through the various feeds, Zillow invoked its
copyright-protective âtrumpingâ rules. For example, one
rule might prefer a photo provided by an agent over one
provided by a multiple listing service, and another might
prefer a local broker to an international one. Zillow used a
rule that gave preference to photos with evergreen rights
over photos with deciduous rights in the same image. As the
district court recognized, âtrumpingâ is a reasonable way to
design a system to manage multiple versions of the same
photo when the authorized use varies across versions. These
rules, along with other features of the system, facilitate
keeping the photos with evergreen rights on the website and
removing the photos with deciduous rights once a property
has sold. Thus, Zillow actively designed its system to avoid
and eliminate copyright infringement.
Notably, VHTâs argument is primarily cast in terms of
Zillow facilitating or enabling infringement by VHTâs
clients that are Zillowâs feed providers. But this type of
VHT, INC. V. ZILLOW GROUP 13
claim more properly falls in the category of secondary
infringement, a claim not advanced by VHT with respect to
the Listing Platform photos.
VHT also asserts that Zillow failed to remove photos
once it received notice that infringing content was on the
Listing Platform, a conscious choice that amounts to
volitional conduct on Zillowâs part. This claim is unavailing
because, once VHT put Zillow on notice of claimed
infringement, Zillow took affirmative action to address the
claims. Additionally, VHTâs assertion that it ârepeatedly
notified Zillow that it was infringingâ is unsupported in the
record.
In July 2014, VHT sent Zillow a takedown notice letter
with a list of thousands of allegedly infringing photos by
residential street address (but not by web address). Zillow
promptly requested all executed license agreements between
VHT and the feed providers who had provided photos to
Zillow, as well as license agreements between VHT and its
photographers, so that Zillow could evaluate whether VHT
possessed exclusive rights to the photos on the Listing
Platform. VHT responded with an unsigned form contract,
which it stated was used with many feed providers, but
which was not tied to any specific photos on Zillowâs
website. Zillow again reiterated its need to see the specific
contracts governing the contested photos. Instead of
responding with the contracts, VHT filed suit. Zillowâs
reasonable response to VHTâs single formal inquiry
(supplemented in a follow-on email) can hardly be
characterized as rising to the level of volitional conduct or
turning a blind eye.
In sum, VHT failed to âprovide[] . . . evidence showing
[Zillow] exercised control (other than by general operation
14 VHT, INC. V. ZILLOW GROUP
of [its website]); selected any material for upload, download,
transmission, or storage; or instigated any copying, storage,
or distributionâ of these photos. See Giganews, 847 F.3d at
670; see also CoStar, 373 F.3d at 555. Thus, we affirm the
district court and conclude Zillow did not directly infringe
VHTâs copyrights in photos displayed on the Listing
Platform post-sale.
B. Direct InfringementâDigs Photos
VHT also claimed that Zillow directly infringed
thousands of photos used on Digs. The jury concluded that
Zillow directly infringed 28,125 photos and rejected its fair
use defense. Following trial, the district court granted in
substantial part Zillowâs motion for judgment
notwithstanding the verdict on the ground that insufficient
evidence supported Zillowâs direct infringement of 22,109
photos that were not displayed on Digs and 2,093 4 photos
that were displayed but not searchable on Digs.
By contrast, the court upheld the juryâs determination
that Zillow directly infringed a set of 3,921 images that were
selected and tagged by Zillow moderators for searchable
functionality and displayed on Digs. Zillow does not appeal
this ruling. However, Zillow argues that fair use insulates it
from liability as to this subset of photos. The jury was
instructed not to consider this legal theory as to these photos
because the district court had determined pretrial that, as a
matter of law, the searchability function did not constitute
fair use. It is that summary judgment ruling that Zillow
challenges on appeal. Because we agree with the district
4
The displayed but non-searchable set includes 2,094 photos. The
district court affirmed the jury verdict with respect to one of those
photos, which Zillow also distributed via email.
VHT, INC. V. ZILLOW GROUP 15
court that the fair use defense does not absolve Zillow of
direct liability for these searchable photos, this portion of the
jury verdict remains intact.
The following chart clarifies the status of the Digs photos
relevant to the direct infringement claims.
Photos Jury Verdict Post-Trial Party
Determination Bringing
Appeal
22,109 not Direct Overturned jury VHT
displayed 5 infringement verdict
2,094 Direct Overturned jury VHT
displayed, not infringement verdict
searchable (except 1 email
photo)
3,921 Direct Upheld jury Zillow:
displayed, infringement verdict direct
searchable infringement
not appealed;
appeals only
summary
judgment on
no fair use
1 blog post Direct Upheld jury Not appealed
photo (not on infringement verdict
Digs)
5
Searchable photos numbered 1,694; 20,415 photos were not
searchable.
16 VHT, INC. V. ZILLOW GROUP
1. Jury VerdictâDirect Infringement
VHTâs claim that Zillow directly infringed photos on
Digs went to the jury. The jury verdict form was framed in
general terms, asking only whether âVHT has proven its
direct copyright infringement claim as to one or more of the
VHT Photos[.]â The jury answered âyes,â and was asked to
specify how many VHT photos were directly infringed. The
jury answered â28,125ââin other words, all of them.
However, the jury was not asked to specify which copyright
rightsâdisplay, reproduction, or adaptionâwere
6
infringed. Following trial, Zillow moved for judgment
notwithstanding the verdict or for a new trial. The task fell
to the district court to examine the evidence as to each right.
On de novo review, âwe apply the same standard used
by the district court in evaluating the juryâs verdictâ and
uphold the verdict unless âthe evidence permits only one
reasonable conclusion, and that conclusion is contrary to the
juryâs verdict.â Wallace v. City of San Diego, 479 F.3d 616,
624 (9th Cir. 2007); Fed. R. Civ. P. 50(a). Specifically, we
âask[] whether the verdict is supported by substantial
evidence,â âwhich is evidence adequate to support the juryâs
conclusion, even if it is also possible to draw a contrary
conclusion.â Unicolors, Inc. v. Urban Outfitters, Inc., 853
F.3d 980, 984, 991 (9th Cir. 2017) (quotation and citation
omitted). Given the sanctity of the jury process, we
undertake this review with special care and reluctance to
overturn a verdict. However, because the verdict here did
not meet this standard, we affirm the district courtâs grant of
Zillowâs motion for judgment notwithstanding the verdict
6
As noted earlier, the distribution right was not contested and is not
an issue on appeal.
VHT, INC. V. ZILLOW GROUP 17
with respect to direct infringement of 22,109 non-displayed
photos and 2,093 displayed but not searchable photos.
We first consider display rights. As background for our
analysis, it is useful to consider the direct infringement by
Zillow that the district court upheld and that Zillow did not
appeal. The district court found substantial evidence that
Zillow directly infringed VHTâs display rights in 3,921
photos displayed on Digs that Zillow moderators selected
and tagged for searchable functionality. Based on testimony,
charts, and statistics, the court found that âthe jury could
have reasonably concluded that users accessed those images
through Digsâs search function.â The court went on to
reason that âthe jury could have reasonably concluded that
Zillowâs moderation efforts, which rendered those images
searchable, proximately caused the copying.â Put
differently, active conduct by Zillow met the volitional-
conduct requirement for direct infringement. Zillow does
not appeal this ruling upholding the juryâs verdict as to the
3,921 displayed, searchable photos.
On appeal, VHT attempts to shoehorn an additional
1,694 photos into this category. This effort falls flat both as
a factual and legal matter because substantial evidence does
not support direct infringement of VHTâs display rights in
the 1,694 searchable images that were not displayed.
VHT posits that the jury could have found that these
photos were displayed because of circumstantial evidence
and because Zillow failed to record whether they were
displayed. Not so. This argument is foreclosed by the
partiesâ stipulated spreadsheet that categorized each photo.
The column labeled âDISPLAYEDâ included an entry for
âYâ (yes) or âNâ (no). The jury was instructed to âtreat
every fact on this spreadsheet as proven,â so VHT cannot
18 VHT, INC. V. ZILLOW GROUP
recast the facts retroactively and now claim that 1,694
searchable images stipulated as âN[OT] DISPLAYEDâ
were in fact displayed or made available for display. Up is
not down.
VHTâs contention that the jury could have reasonably
inferred that Zillow made âavailable for public displayâ all
22,109 âN[OT] DISPLAYEDâ images similarly fails. This
theory presumes that the Copyright Actâs display right
encompasses an exclusive right to âmake available for
display,â a position neither supported by the statute nor
embraced by this court. See Perfect 10, Inc. v. Amazon.com,
Inc., 508 F.3d 1146, 1160 (9th Cir. 2007) (â[B]ased on the
plain language of the statute, a person displays a
photographic image by using a computer to fill a computer
screen with a copy of the photographic image fixed in the
computerâs memory.â); 17 U.S.C. § 101 (âTo âdisplayâ a
work means to show a copy of it, either directly or by means
of a film, slide, television image, or any other device or
process or, in the case of a motion picture or other
audiovisual work, to show individual images
nonsequentially.â). To be sure, the Copyright Office notes
that the outer limits of the public display right have yet to be
defined. U.S. COPYRIGHT OFFICE, THE MAKING AVAILABLE
RIGHT IN THE UNITED STATES 47â51 (Feb. 2016),
https://www.copyright.gov/docs/making_available/making-
available-right.pdf.
What is most important here, though, is that VHTâs
argument comes too late. The jury was never instructed on
the âmade availableâ theory, nor did VHT raise this issue in
its proposed jury instructions or in objections to the final
instructions. See Sinclair v. Long Island R.R., 985 F.2d 74,
78 (2d Cir. 1993) (âthe verdict . . . cannot be sustained on a
theory that was never presented to the juryâ); Ramona Equip.
VHT, INC. V. ZILLOW GROUP 19
Rental, Inc. ex rel. U.S. v. Carolina Cas. Ins. Co., 755 F.3d
1063, 1070 (9th Cir. 2014) (an argument raised for first time
in a post-trial motion is waived). For these reasons,
substantial evidence did not support a finding of direct
infringement of VHTâs public display rights in these 22,109
photos.
Zillow also did not violate VHTâs display rights in 2,093
displayed, non-searchable photos. These are photos that
Digs users copied to âpersonal boardsâ and âImplicit Digs,â
but which Zillow did not add to the searchable set.
A âpersonal boardâ is a bespoke digital bulletin board of
images that a user saves or uploads from the Listing
Platform. Users can also upload their own images. These
boards are typically private, though users can share a link to
their boards. When a user saves a copy of an image with
evergreen rights to a personal board, that image
automatically joins a queue for review by a Zillow
moderator. The moderator then decides whether to
designate the photo for tagging so that it can be searchable
on Digs, and thus select it for public display. Not all photos
that are in the queue for moderation are reviewed.
Additionally, in some instances, a user starts but does not
finish the process of saving an image to this board.
Beginning in 2014, Zillow programmed these âclicked to
saveâ imagesâcalled âImplicit Digsââto enter the queue
for moderator review in the same manner as if the photo had
been saved to a personal board.
According to VHT, the jury could have found that Zillow
âcaused the [2,093] images to be displayed . . . by subjecting
the non-searchable VHT Photos to the potential for
moderation.â This argument defies logic because the only
display that occurred was triggered by the user. Any
20 VHT, INC. V. ZILLOW GROUP
potential for future display is purely speculative. As the
district court explained, the possibility that images might be
moderated and taggedâconduct that is volitionalâis not
sufficient âto transform Zillow from a âpassive hostâ to a
âdirect[] causeâ of the display of VHTâs images.â
Next, we consider VHTâs exclusive reproduction and
adaption rights in the 2,093 displayed, non-searchable
photos. The Copyright Act grants copyright holders the
exclusive right âto reproduce the copyrighted work in copies
or phonorecords.â 17 U.S.C. § 106(1). Direct infringement
of the reproduction right ârequires copying by the defendant,
. . . which [requires] that the defendant cause the copying.â
Fox Broad. Co., Inc. v. Dish Network LLC, 747 F.3d 1060,
1067 (9th Cir. 2014) (quotation and citation omitted). The
adaptation right is the exclusive right âto prepare derivative
works based upon the copyrighted work.â 17 U.S.C.
§ 106(2). Following Giganews, we conclude that Zillowâs
automated processes storing or caching VHTâs photos are
insufficiently volitional to establish that Zillow directly
infringed VHTâs reproduction and adaption rights in these
non-searchable photos. Unlike photos that Zillow curated,
selected, and tagged for searchable functionalityâactivities
that amount to volitional conduct establishing direct
liabilityâthese 2,093 photos were copied to âpersonal
boardsâ and âImplicit Digsâ based on user actions, not the
conduct of Zillow or its moderators.
Any volitional conduct with respect to these photos was
taken by the users, not Zillow. Users, not Zillow,
âselecte[d]â images to add to their personal boards and
âinstigate[d]â the automatic caching process by saving a
particular image. See Giganews, 847 F.3d at 670. This
arrangement is important because courts have found no
direct liability where an online system âresponds
VHT, INC. V. ZILLOW GROUP 21
automatically to usersâ input . . . without intervening
conductâ by the website owner. CoStar, 373 F.3d at 550;
see also Giganews, 847 F.3d at 670. Under these conditions,
courts have analogized online facilities, like Internet service
providers, to a copy machine owner, who is not liable
â[w]hen a customer duplicates an infringing work.â CoStar,
373 F.3d at 550.
Additionally, Zillowâs behind-the-scenes technical work
on Digs photos is not evidence that Zillow âselected any
material for upload, download, transmission, or storage.â
Giganews, 847 F.3d at 670. Zillow produced cached copies
of these Digs images, a process that automatically trims or
pads images whose height and width did not match the target
resolution, for the purposes of accelerating website speed.
This activity does not amount to volitional conduct. Nor can
Zillowâs promotion of Digs, including encouraging users to
share photos through its site, be seen as âinstigat[ing]â user
copying. Id.
Zillowâs conduct with respect to these photos amounts
to, at most, passive participation in the alleged infringement
of reproduction and adaption rights and is not sufficient to
cross the volitional-conduct line. As in cases involving
Internet service providers, Zillow âaffords its [users] an
Internet-based facility on which to post materials, but the
materials posted are of a type and kind selected by the [user]
and at a time initiated by the [user].â CoStar, 373 F.3d at
555. Zillow did not directly infringe VHTâs reproduction
22 VHT, INC. V. ZILLOW GROUP
and adaptation rights in the 2,093 displayed, non-searchable
photos. 7
* * *
In sum, VHT did not present substantial evidence that
Zillow, through the Digs platform, directly infringed its
display, reproduction, or adaption rights in 22,109 not
displayed photos and 2,093 displayed but non-searchable
photos. We affirm the district courtâs grant of judgment
notwithstanding the verdict as to these photos. We now turn
to Zillowâs fair use defense to direct infringement of 3,921
displayed, searchable photos.
2. Summary JudgmentâFair Use re
Searchable Photos
Zillow does not appeal the juryâs finding of direct
infringement with respect to the 3,921 displayed, searchable
photos, but does assert a fair use defense for those photos.
Zillow contends that Digsâ searchable functionality
constitutes fair use, which the district court rejected as a
matter of law at summary judgment.
We recount the somewhat unusual history of the fair use
issue in the proceedings below. On summary judgment, the
district court rejected Zillowâs argument that âthe images
that it has made searchable on Digsâ are protected by fair use
and instead âconclude[d] as a matter of law that Digsâ
searchable functionality does not constitute a fair use.â At
trial, the jury was generally instructed to consider the fair use
7
The same analysis applies to any potential violation of VHTâs
exclusive reproduction and adaption rights in the 22,109 photos that were
not displayed.
VHT, INC. V. ZILLOW GROUP 23
defense as to all VHT photos used on Digs that it found
Zillow had directly or indirectly infringed. However, this set
of photos was carved out for separate treatment. The jury
considered only whether âreproduction, cropping, and
scalingâ of these photos constituted fair use because the
court instructed the jury that the court âha[d] determined,
and you are to take as proven, that the Digs searchable
functionality does not constitute fair use.â After finding that
Zillow directly infringed all 28,125 VHT photos used on
Digs, the jury rejected Zillowâs fair use affirmative defense
for all photos.
The district court upheld the juryâs fair use verdict,
which Zillow does not appeal. Rather, Zillowâs appeal
reaches back to the district courtâs summary judgment ruling
to argue that the Digsâ searchable functionality is fair use as
a matter of law, and, as a result, Zillow bears no liability for
the 3,921 searchable and displayed photos. We review de
novo the district courtâs grant of summary judgment to VHT
on this mixed question of law and fact. Kelly, 336 F.3d at
817.
a. Background on Fair Use
Protection of copyrighted works is not absolute. âThe
fair use defense permits the use of copyrighted works
without the copyright ownerâs consent under certain
situations.â Amazon, 508 F.3d at 1163. Fair use both fosters
innovation and encourages iteration on othersâ ideas, âthus
providing a necessary counterbalance to the copyright lawâs
goal of protecting creatorsâ work product.â Id.; see
Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 575â76
(1994). Fair use also aligns with copyrightâs larger purpose
ââ[t]o promote the Progress of Science and useful Arts,â . . .
and to serve âthe welfare of the public.ââ Amazon, 508 F.3d
24 VHT, INC. V. ZILLOW GROUP
at 1163 (quoting U.S. Const. art. I, § 8, cl. 8, and Sony Corp.
of Am. v. Universal City Studios, Inc., 464 U.S. 417, 429 n.10
(1984)).
Fittingly enough, a case involving a biography of George
Washington serves as a foundational source of fair use in
American law. Folsom v. Marsh, 9 F. Cas. 342 (D. Mass.
1841) (No. 4901). Justice Storyâs narrative description of
copyright doctrine in that case âdistilled the essence of law
and methodology from the earlier casesâ and provided the
conceptual basis for the judge-made fair use doctrine.
Campbell, 510 U.S. at 576. Although the 1976 Copyright
Act codified those principles, it did little to elaborate on
Justice Storyâs description or to clarify application of the
factors. With minimal guidance or elucidation, Congress set
forth four factors for courts to consider when determining
whether the use of a copyrighted work is a âfair useâ:
(1) the purpose and character of the use,
including whether such use is of a
commercial nature or is for nonprofit
educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the
portion used in relation to the copyrighted
work as a whole; and
(4) the effect of the use upon the potential
market for or value of the copyrighted
work.
17 U.S.C. § 107.
VHT, INC. V. ZILLOW GROUP 25
Given license to apply these factors flexibly and to
consider them in their totality, courts have been bedeviled by
the fair use inquiry. See Campbell, 510 U.S. at 577â78. Fair
use has been called âthe most troublesome [doctrine] in the
whole law of copyrightâ and commentators have criticized
the factors as âbillowing white goo.â Monge v. Maya
Magazines, Inc., 688 F.3d 1164, 1170â71 (9th Cir. 2012)
(citations and quotations omitted). In a (still ongoing) effort
to adapt the fair use analysis to a myriad of circumstances,
courts have embellished and supplemented the factors. For
example, the concept of âtransformativenessâ is found
nowhere in the statute, but appeared for the first time in the
Supreme Court in Campbell, where the Court endeavored to
refine and crystalize the first statutory factor: the âpurpose
and character of the use.â 8 510 U.S. at 579. The animating
purpose of the first factor is to determine,
in Justice Storyâs words, whether the new
work merely âsupersede[s] the objectsâ of the
original creation . . . or instead adds
something new, with a further purpose or
different character, altering the first with new
expression, meaning, or message; it asks, in
other words, whether and to what extent the
new work is âtransformative.â
8
The concept of transformative use had appeared in earlier lower
court decisions, e.g., Twin Peaks Prods., Inc. v. Publâns Intern., Ltd., 996
F.2d 1366, 1375 (2d Cir. 1993) (â[I]t is not uncommon for works serving
a fair use purpose to give at least a brief indication of the plot. . . . In
identifying plot, the author of the second work may or may not be said
to have made . . . a âtransformativeâ use. . . . Such use would occur, for
example, if a plot was briefly described for purposes of adding
significant criticism or comment about the authorâs plotting technique.â).
26 VHT, INC. V. ZILLOW GROUP
Id. (citations omitted). Because transformation advances
copyrightâs core goals, âthe more transformative the new
work, the less will be the significance of other factors.â Id.
Likewise, despite the absence of a textual hook, public
purpose also has been read into the statute. See Amazon, 508
F.3d at 1166; Kelly, 336 F.3d at 820. While we can discern
certain animating principles bridging cases in this area, the
doctrine has hardly followed a straight, or even slightly
curved, line.
The focus of the partiesâ debate here is whether Zillowâs
tagging of 3,921 VHT photos for searchable functionality on
Digs was transformative and thus supported a finding of fair
use. The purpose of Digs is to permit users to search for
certain attributes or features, such as a marble countertop or
hardwood floor, and view photos of rooms with those
attributes or features. These photos are either uploaded by
users to Digs, or selected manually or electronically by
Zillow. Zillow then tags the photos to make them
searchable. Of course, tagging makes it possible for a userâs
keyword search to produce relevant results. Zillow refers to
these tagged photos as âsearchable imagesâ or components
of the âsearchable set.â VHTâs 3,921 photos are in the
searchable set.
Zillow contends that Digs is effectively a search engine,
which makes its use of VHTâs photos transformative, and
therefore fair use. VHT responds that this is not fair use
because Digs is not a search engine and the tagging for
searchable functionality is not transformative. Dueling
âsearch engineâ characterizations do not resolve fair use
here. Instead, we step back and assess the question
holistically, as we have been instructed to do by the statute
and the Supreme Court. We consider the reality of what is
VHT, INC. V. ZILLOW GROUP 27
happening rather than resorting to labels. To do that, it is
helpful to recount the history of the search engine cases.
b. Evolution of Search Engine Cases
Over the past two decades, search engines have emerged
as a significant technology that may qualify as a
transformative fair use, making images and information that
would otherwise be protected by copyright searchable on the
web. See Amazon, 508 F.3d at 1166â67; Kelly, 336 F.3d at
818â22. In assessing fair use in the context of search
engines, courts have relied heavily on the first fair use factor,
and in particular âwhether and to what extent the new work
is transformative.â Campbell, 510 U.S. at 579 (citation and
quotation omitted); see also Amazon, 508 F.3d at 1164
(explaining the Kelly court relied âprimarilyâ on the first fair
use factor when conducting its analysis); Authors Guild v.
Google, Inc., 804 F.3d 202, 220â221, 223 (2d Cir. 2015)
(offering a relatively abbreviated consideration of the
remaining three fair use factors, all of which were informed
by its analysis of the first factor).
In an early opinion applying fair use principles in the
digital age, we held that the now-defunct search engine
Arribaâs creation and use of thumbnail versions of a
professional photographerâs copyrighted images was fair use
because the âsmaller, lower-resolution images . . . served an
entirely different function than [the] original images.â Kelly,
336 F.3d at 815, 818. The original images served an artistic
or aesthetic purpose. Id. at 819. By contrast, the thumbnail
images, which were provided in response to a userâs search
query, were incorporated into the search engineâs overall
function âto help index and improve access to images on the
internet and their related web sites.â Id. at 818. Investing
the images with a new purpose made Arribaâs use
28 VHT, INC. V. ZILLOW GROUP
transformative, not superseding. Indeed, the thumbnail
versions could not supersede the original use because the
thumbnails were grainy and low-resolution when enlarged.
Id. Additionally, Arribaâs use of the thumbnail images
âpromote[d] the goals of the Copyright Act and the fair use
exceptionâ because they âbenefit[ed] the public by
enhancing information-gathering techniques on the
internet.â Id. at 820. Just as Campbell had drawn out the
principle of transformation from the first statutory factor, we
drew out the principle of public benefit.
Building on our reasoning in Kelly, in Amazon we held
that Googleâs use of thumbnail images in its search engine
is âhighly transformativeâ and thus fair use. 508 F.3d at
1163â65. As in Kelly, we concluded that âa search engine
provides social benefit by incorporating an original work
into a new work, namely, an electronic reference tool.â Id.
at 1165. On a scale much greater than the search engine at
issue in Kelly, Google âimprove[s] access to images on the
internet and their related web sitesâ by âindex[ing]â the
internet and linking to the original source image generated
in the search results. Kelly, 336 F.3d at 815â16, 818. By
using the thumbnail images in service of the search engine,
Google âtransforms the image,â which might have been
created for an âentertainment, aesthetic, or informative
function,â âinto a pointer directing a user to a source of
information.â Amazon, 508 F.3d at 1165. As a result of the
new function that the image serves, Googleâs use of the
entire image in its search engine results âdoes not diminish
the transformative nature of [its] use.â Id. And, further
developing the public benefit principle from Kelly, we
emphasized that Googleâs search engine both âpromotes the
purposes of copyright and serves the interests of the public,â
which significantly outweighed the superseding or
VHT, INC. V. ZILLOW GROUP 29
commercial uses of the search engine, and strongly
supported finding fair use. Id. at 1166.
More recently, the Second Circuit considered whether
fair use protected the Google Books search engine, which
employs digital, machine-readable copies of millions of
copyright-protected books scanned by Google. Authors
Guild, 804 F.3d at 207â08. 9 The Google Books search
engine enables a full text search, which makes possible
searching for a specific term, and then provides âsnippets,â
or a part of a page, for users to read. Id. at 208â09, 216â17.
The court held that both functions involve a âhighly
transformative purpose of identifying books of interest to the
searcher.â Id. at 218. The search function âaugments public
knowledge by making available information about
Plaintiffsâ books without providing the public with a
substantial substitute.â Id. at 207. And the search engine
makes possible a new type of research known as âtext
miningâ or âdata mining,â whereby users can search across
the corpus of books to determine the frequency of specified
terms across time. Id. at 209, 217. Additionally, the
âsnippetâ view provides context for users to assess if a book
is relevant to them, without providing so much context as to
supersede the original. Id. at 218. To boot, Google often
provides a link to a page where the entire book can be found
at a library or purchased. Id. at 209. Concluding that
Googleâs commercial motivation did not significantly
outweigh these transformative uses, the court held that the
first factor strongly supported a finding of fair use. Id. at
219.
9
The Google Books search engine also featured millions of public
domain texts. For obvious reasons, fair use was not at issue with those
works.
30 VHT, INC. V. ZILLOW GROUP
What we divine from these cases is that the label âsearch
engineâ is not a talismanic term that serves as an on-off
switch as to fair use. Rather, these cases teach the
importance of considering the details and function of a
websiteâs operation in making a fair use determination. We
now examine Digs with those lessons in mind.
c. Application of Fair Use Principles
As noted, the first factor assesses the character of the use,
including whether it is commercial in nature, and, critically,
whether it is âtransformative.â There is no dispute that
Zillowâs use is for commercial purposes, a factor we cannot
ignore. To determine if that use is transformative, we
consider whether and to what extent it âadds something new,
with a further purpose or different character, altering the first
with new expression, meaning, or message[.]â Campbell,
510 U.S. at 579. Though we agree that Digs is a type of
search engine because it offers searchable functionality, it is
qualitatively different than Google and other open-universe
search engines, as well as different than the Google Books
search engine.
Most simply, a search engine is a software program that
enables information retrieval by helping users find
information through the use of keyword queries. But not all
search engines are created equal. The search engines
commonly used for day-to-day research are internet-wide
search engines, like Google, Yahoo, or Bing. These search
engines are programs powered by algorithms that search or
âcrawlâ the web. A search engine like Google then indexes
websites, stores them on a database, and runs usersâ search
queries against it. Search results are typically a mix of
images and text, which include hyperlinks to sources of that
content elsewhere on the web. Amazon, 508 F.3d at 1155.
VHT, INC. V. ZILLOW GROUP 31
Unlike the internet-wide search engines considered in
Amazon and Kelly, Digs is a closed-universe search engine
that does not âcrawlâ the web. Users can run searches on the
âsearchable setâ of images within Digsâ walled garden,
which includes VHT photos. The search results do not direct
users to the original sources of the photos, such as VHTâs
website. Rather, they link to other pages within Zillowâs
website and, in some cases, to third-party merchants that sell
items similar to those featured in the photo.
That Digs makes these images searchable does not
fundamentally change their original purpose when produced
by VHT: to artfully depict rooms and properties.
Additionally, Digs displays the entire VHT image, not
merely a thumbnail. Unlike in Amazon, the new image does
not serve a âdifferent functionâ than the old one. Amazon,
508 F.3d at 1165. Zillowâs use preserves the photosâ
âinherent character.â Monge, 688 F.3d at 1176. And Zillow
âsimply supersed[es] [VHTâs] purposeâ in creating the
images in the first place. Kelly, 336 F.3d at 819â20; see
Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S.
539, 550â51 (1985) (holding that if a new work
âsupersede[s] the use of the original,â it is probably not a fair
use).
Comparing Digs to the Google Books search engine
further drives home this analysis. We agree with the Second
Circuitâs observation that the copyright dispute over the
Google Books search engine âtests the boundaries of fair
use.â Authors Guild, 804 F.3d at 206. We conclude that
Digs goes one step furtherâand crosses the line.
Like Digs, the Google Books search engine operates on
a closed database comprised of complete digital copies of
original works. Id. at 217. But the similarities end there.
32 VHT, INC. V. ZILLOW GROUP
The Google Books project makes it possible to search books
for âidentifying information instantaneously supplied [that]
would otherwise not be obtainable in lifetimes of searching.â
Id. at 209. With this broad purpose in mind, the court
rightfully observed that this system âaugments public
knowledge.â Id. at 207. This rationale bears no comparison
to Digs.
Nor is the limited transformation present on Digs
remotely comparable to the unprecedented text mining, word
pattern, frequency of use, and other statistical analyses made
possible for the first time by Google Books. Google Books
search results provide â[a] brief description of each book,
entitled âAbout the Book,ââ as well as, for some books, links
for borrowing or purchasing the book. Id. at 209.
Significantly, a Google Books search produces only a
âsnippetâ of the book, and sometimes it âdisables snippet
view entirely.â Id. at 210. At the request of a rights holder,
Google âwill exclude any book altogether from snippet
view.â Id.
These features, in conjunction with other creative aspects
of Google Books, result in a categorically more
transformative use than Zillowâs simple tagging and query
system that displays full-size copyrighted images serving the
same purpose as the originals, with no option to opt out of
the display, and with few, if any, transformative qualities.
Any transformation by Zillow pales in comparison to the
uses upheld in prior search engine cases. Such use also does
nothing to further the use of copyrighted works for the
socially valuable purposes identified in the Copyright Act
itself, like âcriticism, comment, news reporting,
teaching . . . , scholarship, or research.â 17 U.S.C. § 107;
see also 4 NIMMER ON COPYRIGHT § 13.05[A]. The lack of
transformation is especially significant because, as Kelly
VHT, INC. V. ZILLOW GROUP 33
teaches, â[t]he more transformative the new work, the less
important the other factors, including commercialism,
become.â 336 F.3d at 818 (citing Campbell, 510 U.S. at
579). If, as the Second Circuit suggested, Googleâs use
âtests the boundaries of fair use,â Zillowâs efforts push Digs
into the outer space of fair use. Authors Guild, 804 F.3d at
206. So while Google Books may inch across the boundary
of fair use, Zillowâs use does not approach the line.
Our decisions in Amazon and Kelly provide a roadmap
for analyzing the second factor, which focuses on the nature
of the copyrighted work. In those cases, we held that
photographersâ images are creative, especially when they are
created for public viewing. Amazon, 508 F.3d at 1167;
Kelly, 336 F.3d at 820. âWorks that are creative in nature
are âcloser to the core of intended copyright protectionâ than
are more fact-based works.â Napster, 239 F.3d at 1016
(quoting Campbell, 510 U.S. at 586).
So too here. VHTâs photos are aesthetically and
creatively shot and edited by professional photographers.
That Zillowâs curators select the most creative photos for the
Digs searchable set underscores the creative nature of the
works. But, as the district court properly noted, this factor
operates âwith less forceâ in favor of VHT because the
photos had already been published on the Listing Platform.
See Kelly, 336 F.3d at 820 (âThe fact that a work is published
or unpublished also is a critical element of its nature.
Published works are more likely to qualify as fair use
because the first appearance of the artistâs expression has
already occurred.â). Ultimately, this factor only slightly
favors VHT, further cutting against finding fair use.
The third factor evaluates the amount and substantiality
of the copyrighted work that was used. â[C]opying an entire
34 VHT, INC. V. ZILLOW GROUP
work militates against a finding of fair use.â Worldwide
Church of God v. Phila. Church of God, Inc., 227 F.3d 1110,
1118 (9th Cir. 2000) (quotation and citation omitted).
However, this analysis is informed by the âpurpose of the
copying.â Campbell, 510 U.S. at 586. In that spirit, we have
found that copying full works qualifies as fair use where â[i]t
was necessary . . . to copy the entire image to allow users to
recognize the image and decide whether to pursue more
information about the image or the originating web site.â
Kelly, 336 F.2d at 821. In contrast to Amazon and Kelly,
nothing justifies Zillowâs full copy display of VHTâs photos
on Digs.
Finally, the fourth factor considers âthe effect of the use
upon the potential market for or value of the copyrighted
work.â 17 U.S.C. § 107(4). To defeat a fair use defense,
âone need only show that if the challenged use should
become widespread, it would adversely affect the potential
market for the copyrighted work.â Harper & Row
Publishers, 471 U.S. at 568 (citation and quotation omitted).
Although VHT had licensed only a handful of photos for
secondary uses (and none on a searchable database), that
market was more than âhypothetical.â See Amazon, 508
F.3d at 1168. Significantly, VHT was âactively exploringâ
the market for licensing its photos to home design websites
like Digsâincluding with Zillow itself. This factor favors
VHT.
Taken together, the nature of Zillowâs use, when
integrated with the four factors, cuts against finding fair use
by Zillow. We affirm the district courtâs grant of summary
judgment to VHT with respect to fair use.
VHT, INC. V. ZILLOW GROUP 35
II. Secondary InfringementâDigs
Turning to VHTâs claim for secondary infringement, the
district court correctly concluded that Zillow did not
secondarily infringe VHTâs exclusive rights in the 28,125
photos used on Digs, aside from 114 images created on Digs
after VHT specifically identified them, which are not on
appeal. As noted before with regard to the district courtâs
ruling on direct infringement, âwe apply the same standard
used by the district court in evaluating the juryâs verdictâ and
uphold the verdict unless âthe evidence permits only one
reasonable conclusion, and that conclusion is contrary to the
juryâs verdict.â Wallace, 479 F.3d at 624; Fed. R. Civ. P.
50(a). The juryâs verdict here did not meet this standard.
We affirm the district courtâs grant of Zillowâs motion for
judgment notwithstanding the verdict with respect to
secondary infringement, both contributory and vicarious
infringement.
A. Contributory Liability
Contributory liability requires that a party â(1) has
knowledge of anotherâs infringement and (2) either
(a) materially contributes to or (b) induces that
infringement.â Perfect 10, Inc. v. Visa Intâl Serv., Assân, 494
F.3d 788, 795 (9th Cir. 2007). Zillowâs actions do not satisfy
the second prongâmaterial contribution or inducementâso
we do not address the first prong. See Giganews, 847 F.3d
at 671.
In Giganews, we outlined the means of material
contribution to infringement:
In the online context, . . . a âcomputer system
operatorâ is liable under a material
contribution theory of infringement âif it has
36 VHT, INC. V. ZILLOW GROUP
actual knowledge that specific infringing
material is available using its system, and can
take simple measures to prevent further
damage to copyrighted works, yet continues
to provide access to infringing works.â
Id. at 671 (quoting Amazon, 508 F.3d at 1172); see also
Ellison v. Robertson, 357 F.3d 1072, 1078 (9th Cir. 2004)
(applying this standard in the online context); Napster, 239
F.3d at 1022 (same); Religious Tech. Ctr. v. Netcom On-Line
Commân Servs., Inc., 907 F. Supp. 1361, 1375 (N.D. Cal.
1995) (same). There is insufficient evidence to support the
contributory infringement verdict under the âsimple
measuresâ standard.
VHTâs position that âthe jury could have reasonably
decided that Zillow in fact had the means to identify and
removeâ the allegedly infringing images that VHT identified
by property address, as opposed to their website designation
or Uniform Resource Locator (âURLâ), fails. Zillow
testified throughout trial that, in order to systematically or
swiftly take down a large number of photos, it required the
Zillow Image IDâa number that is in the URL for each
image. This stands to reason, because âZillow receives
multiple copies of the same photograph, depicting the same
property, with the same listing agent, from different feeds.â
Merely identifying the physical property address in no way
identified the proper feed or the correct photo. Thus, Zillow
did not have appropriately âspecificâ information necessary
to take âsimple measuresâ to remedy the violation.
VHTâs argument that Zillow is liable for failing to ask
for the URLs of the allegedly infringing photos also fails.
Asking for the URLs was not Zillowâs duty under the
contributory liability standard: Zillow must have âactual
VHT, INC. V. ZILLOW GROUP 37
knowledge that specific infringing material is available using
its system.â Amazon, 508 F.3d at 1172 (citation and
quotation omitted). Zillow first reasonably asked to see the
licenses between VHT and the feed providers; otherwise,
Zillow could not assess ownership and rights in the
undefined images. That Zillow did not proactively request a
list of URLs before VHT filed suit does not make Zillow
contributorily liable.
Additionally, Zillowâs failure to systematically use
watermarking technology does not show there was a âsimple
measureâ available that it failed to use. Even assuming there
were âreasonable and feasible meansâ for Zillow to employ
watermark detection technology, in practice VHT rarely
watermarked its photos. See Giganews, 847 F.3d at 672
(citation and quotation omitted).
Nor did Zillow induce infringement. Inducement
liability requires evidence of âactive steps . . . taken to
encourage direct infringement.â Metro-Goldwyn-Mayer
Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 936 (2005)
(citation and quotation omitted)). Evidence of active steps
includes âadvertising an infringing use or instructing how to
engage in an infringing use,â because such evidence
âshow[s] an affirmative intent that the product be used to
infringe.â Id.; see also Columbia Pictures Industries, Inc. v.
Fung, 710 F.3d 1020, 1032 (9th Cir. 2013) (inducement
liability requires âan object of promoting [the productâs] use
to infringe copyrightâ). The âimproper objectâ of
infringement âmust be plain and must be affirmatively
communicated through words or actions[.]â Fung, 710 F.3d
at 1034.
In view of the evidence, âno reasonable juror could
conclude [Zillow] distributed its product with the object of
38 VHT, INC. V. ZILLOW GROUP
promoting its use to infringe copyright.â Giganews, 847
F.3d at 672 (quotation and citation omitted). For example,
Zillowâs generally applicable tools and messages for users
to save more photos from the Listing Platform to Digs does
not âpromote[] the use of [Digs] specifically to infringe
copyrights.â Amazon, 508 F.3d at 1170 n.11. Nor does
evidence that Zillow sometimes makes mistakes about the
display rights in a feed plainly communicate an improper
object of infringement. Zillow corrects these inadvertent
errors when it learns of them. Because a âfailure to take
affirmative steps to prevent infringementâ alone cannot
trigger inducement liability, the inducement claim is a
particularly poor fit for Zillowâs real estate and home design
websites, which have âsubstantial noninfringing uses.â
Grokster, 545 U.S. at 939 n.12.
B. Vicarious Liability
Neither does the vicarious liability theory fit the Zillow
platform. To prevail on a vicarious liability claim, â[VHT]
must prove â[Zillow] has (1) the right and ability to supervise
the infringing conduct and (2) a direct financial interest in
the infringing activity.ââ Giganews, 847 F.3d at 673
(quoting Visa, 494 F.3d at 802). The first element requires
âboth a legal right to stop or limit the directly infringing
conduct, as well as the practical ability to do so.â Amazon,
508 F.3d at 1173. VHTâs vicarious infringement argument
fails because, as the district court found, âZillow âlack[ed]
the practical ability to policeâ its usersâ infringing conductâ
on Digs.
As discussed with respect to contributory infringement,
there was insufficient evidence that Zillow had the technical
ability to screen out or identify infringing VHT photos
among the many photos that users saved or uploaded daily
VHT, INC. V. ZILLOW GROUP 39
to Digs. Regardless, such allegations do not fall under the
vicarious liability rubric: Zillowâs âfailure to change its
operations to avoid assisting [users] to distribute . . .
infringing content . . . is not the same as declining to exercise
a right and ability to make [third parties] stop their direct
infringement.â Amazon, 508 F.3d at 1175.
Our conclusion is consistent with earlier dicta that âthe
vicarious liability standard applied in Napster can be met by
merely having the general ability to locate infringing
material and terminate usersâ access.â UMG Recordings,
Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006, 1030
(9th Cir. 2013) (emphasis added). Once VHT photos were
uploaded to the Listing Platform with appropriate
certification of rights, ferreting out claimed infringement
through use on Digs was beyond hunting for a needle in a
haystack. As the district court concluded, âthe trial record
lacks substantial evidence of a practical ability to limit direct
infringement for the same reasons it lacks substantial
evidence of simple measures to remove infringing material.â
And linking a claimed infringement to a feed provider was
even more of an impossibility.
We affirm the district courtâs judgment notwithstanding
the verdict concluding that substantial evidence did not
support the claim that Zillow secondarily infringed VHTâs
exclusive rights in its photos.
III. Damages
A. Compilation
The size of the damages award hinges on whether VHTâs
photos used on Digs are part of a âcompilationâ or if they are
individual photos. This distinction makes a difference. If
the VHT photo database is a âcompilation,â and therefore
40 VHT, INC. V. ZILLOW GROUP
one âworkâ for the purposes of the Copyright Act, then VHT
would be limited to a single award of statutory damages for
Zillowâs use of thousands of photos on Digs. 17 U.S.C.
§ 504(c)(1). But if the database is not a compilation, then
VHT could seek damages for each photo that Zillow used.
In lieu of actual damages, a copyright holder may elect
to receive statutory damages under the Copyright Act. 17
U.S.C. § 504(c)(1). VHT did so. The Act provides for âan
award of statutory damages for all infringements involved in
the action, with respect to any one work . . . in a sum of not
less than $750 or more than $30,000.â Id. This provision
ties statutory damages to the term âwork,â which is
undefined, except in a circular manner: copyright law
protects âoriginal works of authorship.â 17 U.S.C. § 102(a).
Fortunately, there is a definition of compilation: âa work
formed by the collection and assembling of preexisting
materials or of data that are selected, coordinated, or
arranged in such a way that the resulting work as a whole
constitutes an original work of authorship.â 17 U.S.C.
§ 101. For purposes of statutory damages, âall the parts of a
compilation . . . constitute one work.â 17 U.S.C.
§ 504(c)(1). âThe question of whether a work constitutes a
âcompilationâ for the purposes of statutory damages pursuant
to Section 504(c)(1) of the Copyright Act is a mixed question
of law and fact.â Bryant v. Media Right Prods., Inc., 603
F.3d 135, 140 (2d Cir. 2010).
Whether various VHT photo collections comprise one or
more compilations is a threshold damages question. Before
trial, Zillow asked for a legal determination on the
compilation issue. That motion was denied. However, the
district court did not make an explicit determination about
compilation and the specifics of compilation were not put
before the jury. In fairness to the district court, we might
VHT, INC. V. ZILLOW GROUP 41
infer from the transcript that there was an implicit
determination as to whether VHTâs photos are part of a
compilation, but we are left in doubt. Instead, the jury was
instructed that â[e]ach VHT Photo that has independent
economic value constitutes a separate work.â On the verdict
form, the jury was asked which âphotographs have
independent economic value.â
The notion of âindependent economic valueâ derives not
from the statute, but from case law. In the Ninth Circuit, the
question of whether somethingâlike a photo, television
episode, or so forthâhas âindependent economic valueâ
informs our analysis of whether the photo or episode is a
work, though it is not a dispositive factor. See Columbia
Pictures Television, Inc. v. Krypton Broad. of Birmingham,
Inc., 259 F.3d 1186, 1193 (9th Cir. 2001). But consideration
of the independent economic value factor does not answer
the question whether something is a compilation. That
question remains unanswered here.
On appeal, the parties have polar opposite views on
whether there was a compilation (Zillowâs position) or
whether each photo is entitled to a separate damages award
(VHTâs position). VHT registered thousands of photos as
compilations. But the Copyright Office warns that such a
registration âmayâ limit the copyright holder âto claim only
one award of statutory damages in an infringement action,
even if the defendant infringed all of the component works
covered by the registration.â U.S. COPYRIGHT OFFICE,
COMPENDIUM OF U.S. COPYRIGHT OFFICE PRACTICES
§ 1104.5 (Sept. 2017), https://www.copyright.gov/comp3/
docs/compendium.pdf. Though the registration label is not
controlling, it may be considered by the court when
assessing whether a work is a compilation. See Yellow
Pages Photos, Inc. v. Ziplocal, LP, 795 F.3d 1255, 1277
42 VHT, INC. V. ZILLOW GROUP
(11th Cir. 2015) (âAlthough the manner of copyright
registration is not dispositive of the works issue, this Court
has previously considered it to be at least a relevant factor.â).
Ultimately, what counts is the statutory definition.
Because there were at least ten different copyright
registrations, thousands of photos, and no explicit
determination on compilation, we decline to sort out the
compilation issue on appeal. We remand to the district court
for further proceedings as to whether the VHT photos
remaining at issue were a compilation.
B. Willfulness
The jury found that Zillow willfully infringed exclusive
rights to 3,373 searchable VHT photos that were eligible for
statutory damages. The district court largely upheld the
willfulness finding in its post-trial motions order. However,
the court granted Zillow judgment notwithstanding the
verdict on 673 images that were not displayed, so the courtâs
final willfulness judgment applied to 2,700 searchable
photos on Digs.
To uphold a juryâs willfulness finding, there must be
substantial evidence â(1) that the [the infringing party] was
actually aware of the infringing activity, or (2) that the
[infringing partyâs] actions were the result of reckless
disregard for, or willful blindness to, the copyright holderâs
rights.â Unicolors, 853 F.3d at 991 (citation and quotation
omitted). Under the second prong, willful blindness requires
that the infringing party â(1) subjectively believed that
infringement was likely occurring on their networks and that
they (2) took deliberate actions to avoid learning about the
infringement.â Luvdarts, LLC v. AT&T Mobility, LLC, 710
F.3d 1068, 1073 (9th Cir. 2013). Reckless disregard can be
demonstrated, for example, when a party ârefus[es], as a
VHT, INC. V. ZILLOW GROUP 43
matter of policy, to even investigate or attempt to determine
whether particular [photos] are subject to copyright
protections.â Unicolors, 853 F.3d at 992. A finding of
willfulness has significant financial consequencesâthe jury
may increase damages up to $150,000 per violation. See 17
U.S.C. § 504(c)(2).
As noted with respect to infringement, we do not take
lightly the decision to reverse a jury verdict, nor do we
cavalierly set aside the district courtâs thoughtful analysis.
But here, we are compelled to disagree with both because
substantial evidence does not support willfulness as to the
2,700 photos.
The test for willfulness is in the alternative: either actual
notice or recklessness shown by reckless disregard or
turning a blind eye to infringement. We turn first to actual
notice. That VHT provided Zillow with minimal notice of
infringement does not itself establish that any subsequent
infringement was willful. Rather, â[c]ontinued use of a work
even after one has been notified of his or her alleged
infringement does not constitute willfulness so long as one
believes reasonably, and in good faith, that he or she is not
infringing.â Evergreen Safety Council v. RSA Network Inc.,
697 F.3d 1221, 1228 (9th Cir. 2012); see also Danjaq LLC
v. Sony Corp., 263 F.3d 942, 959 (9th Cir. 2001) (âIt would
seem to follow that one who has been notified that his
conduct constitutes copyright infringement, but who
reasonably and in good faith believes the contrary, is not
âwillfulâ for these purposes.â) (quoting 4 NIMMER ON
COPYRIGHT § 14.04[B][3]).
Such is the case here. Zillowâs agreements with its feed
providers grant it an express license to use, copy, distribute,
publicly display, and create derivative works for each photo,
44 VHT, INC. V. ZILLOW GROUP
and the agreements include unambiguous representations by
the feed providers that they have the authority to assign such
rights. Zillow developed procedures to identify ex ante the
scope of its license for each uploaded photo and employed
automated protocols to manage the use of each photo
consistent with its evergreen or deciduous designation. At
no point during their year of communications prior to
issuance of the notice letter did VHT raise the specter of
infringement. Notably, VHTâs eventual notice was minimal:
one letter with a list of allegedly infringing photos,
designated by residential street address, not web address.
The notion that Zillow failed to take appropriate
responsive measures after receiving this notice is belied by
the record. Zillow immediately requested information to
confirm VHTâs copyright ownership and cross-reference the
photos with licensing information. VHT was not
forthcoming with that information. Rather, in response,
VHT offered merely an unsigned form contract. Instead of
providing helpful information, VHT then filed suit. Given
the limited information provided by VHT, Zillow could not
reasonably be expected to have promptly and unilaterally
removed each flagged photo. As the district court noted,
VHT failed to demonstrate there were simple measures
available for the removal of infringing photos or that Zillow
had any âpractical ability to independently identify
infringing images.â
Thus, we are compelled to conclude that substantial
evidence does not show Zillow was âactually awareâ of its
infringing activity. See Evergreen Safety Council, 697 F.3d
at 1228. Zillowâs belief that feed providers had properly
licensed its uses and that its system effectively respected
those rights was reasonable. And, as the district court
observed, â[t]he record suggests no reason to conclude that
VHT, INC. V. ZILLOW GROUP 45
Zillow maintained that position in bad faith, and Zillowâs
non-infringement contention proved accurate as to most of
the images at issue in this lawsuit.â
We reach the same conclusion as to whether Zillow
recklessly disregarded or willfully blinded itself to its
infringement. In reaching an opposite conclusion, the
district court observed that Zillow did not âperform[] further
investigation into the rights each [feed provider] possesses,â
nor did it ât[ake] responsive measures to obtain further
informationâ after VHT provided the minimal notice of
potential infringement. That conclusion is at odds with the
evidence, for the reasons outlined above.
VHTâs argument that Zillow, a sophisticated business
with a robust legal team, should have known that its feed
provider license agreements were invalid is unavailing.
VHT argues that when Zillow saw the non-exclusive grant
of rights in VHTâs unsigned form contract, showing that the
feed providers did not have a right to sublicense, Zillow
should have known the licenses were invalid. Despite
requests for such information, Zillow did not have access to
VHTâs executed licenses with the feed providers who
furnished VHTâs photos to Zillow. Access to a blank form
contract (that the district court earlier found ambiguous as a
matter of law) is not enough. We conclude that substantial
evidence does not show Zillow was âreckless or willfully
blindâ as to its infringement. We reverse the district court
and vacate the juryâs finding of willful infringement.
IV. Conclusion
We affirm the district courtâs summary judgment in
favor of Zillow on direct infringement of the Listing
Platform photos. With respect to direct liability on the Digs
photos, we affirm the district courtâs grant of judgment
46 VHT, INC. V. ZILLOW GROUP
notwithstanding the verdict on the 22,109 non-displayed
photos and the 2,093 displayed but not searchable photos.
We uphold summary judgment in favor of VHT on the 3,921
displayed, searchable photos.
We affirm the district courtâs judgment notwithstanding
the verdict on secondary liability, both contributory and
vicarious, on the Digs photos.
We reverse the district courtâs denial of judgment
notwithstanding the verdict on the issue of willfulness and
vacate the juryâs finding on willfulness.
We remand consideration of the compilation issue to the
district court.
Affirmed in part, reversed in part and remanded.
Each party shall pay its own costs on appeal.