Active or Passive?

October 09, 2019
Patterson Thuente IP

What makes website operators directly liable for copyright infringement?

As many copyright holders have learned the hard way, the Internet opened a whole new frontier in the world of infringement, particularly when it comes to pinning liability on the appropriate parties. In a recent case involving the unauthorized use of thousands of copyrighted photographs, the U.S. Court of Appeals for the Ninth Circuit laid out the types of behaviors that will — and won’t — make a website operator directly liable for copyright infringement on their sites.

A photographer snaps back

Zillow.com, an online real estate marketplace, posted numerous copyrighted photos owned by VHT, Inc., a professional real estate photography studio. VHT licenses its photos to real estate agents, multiple listing services and brokerages to use for marketing purposes.

Legal copyright law concept image

Zillow uses VHT photos on two parts of its website. The Listing Platform features photos and information about properties on and off the market. The Digs section, geared toward home improvement and remodeling, features photos of artfully designed rooms in some of the properties. Zillow tags photos on the Listing Platform so Digs users can search by criteria such as room type, style, cost and color.

VHT sued Zillow, alleging various claims of copyright infringement. Before trial, the district court dismissed the direct infringement claim regarding the 54,257 nonsearchable photos displayed on the Listing Platform after a property was sold. Both parties appealed issues stemming from the jury verdict, and both pre- and post-trial rulings.

The court focuses on conduct

VHT challenged the trial court’s pretrial dismissal of the direct infringement claims for the photos displayed on the Listing Platform postsale. It asserted its license agreements authorized use of those photos only in relation to the sale of the property.

As the Ninth Circuit noted, direct infringement liability requires conduct by the accused that reasonably can be described as the direct cause of the infringement. This prerequisite, it said, takes on greater importance in cases that involve automated systems like Zillow’s website.

The appellate court has previously held that direct copyright liability for website owners arises only when they’re actively involved in the infringement to the degree that a court can conclude they violated the copyright owner’s exclusive rights. Activities such as automatic copying, storage and transmission of copyrighted materials — instigated by others — generally don’t suffice.

To demonstrate volitional conduct, the Ninth Circuit said, a party like VHT must provide evidence showing the alleged infringer:

  • Exercised control (beyond general operation of its website),
  • Selected any copyrighted material for upload, download, transmission or storage, or
  • Instigated any copying, storage or distribution of the copyrighted material.

The court found that VHT had failed to provide such evidence for the Listing Platform photos. It cited several reasons why Zillow hadn’t engaged in the necessary volitional conduct.

For example, the Listing Platform is populated with data submitted by third-party sources (such as real estate agents) who attested to the permissible use of the data, and Zillow’s system for managing photos on the platform was constructed in a “copyright-protective way.” Zillow doesn’t select the photos on the platform feed — the third-party sources select and upload every photo that ends up on the platform. And Zillow required the providers to certify the extent of their rights to use each photo, classified each photo accordingly and programmed its automated systems to treat each photo consistently with the certified scope of use.

Zillow didn’t get off scot-free, though. The trial court had upheld the jury’s finding that it was directly liable for infringement of some of the photos selected and tagged for searchability on Digs. Zillow didn’t appeal this ruling, but did unsuccessfully assert a fair use defense on appeal. (See “Fair use defense fails for searchable pics.”)

The big picture

The dual outcomes in this case — where hosting the photos didn’t support direct liability but selecting and tagging did — illustrate well the standards courts will apply when determining the copyright infringement liability for website operators. In short, providing an Internet-based facility for posting materials selected by users is passive participation that falls short of the required volitional conduct.

VHT, Inc. v. Zillow Group, Inc., No. 17-35587, March 15, 2019, Ninth Cir.

Fair use defense fails for searchable pics

On appeal, Zillow argued that the fair use doctrine insulated it from infringement liability for the photos the company selected and tagged for searchable functionality in the Digs section. Specifically, Zillow argued that Digs is effectively a search engine, which makes its use of the photos permissible transformative fair use.

The U.S. Court of Appeals for the Ninth Circuit cautioned that the label “search engine” isn’t a “talismanic term that serves as an on-off switch as to fair use.” It shot down Zillow’s argument, finding that making the photos searchable didn’t fundamentally change their original purpose when produced by VHT — to artfully depict rooms and properties.

The court found that any transformation paled in comparison to the uses upheld in earlier search engine cases. Moreover, Zillow’s handling of the photos did nothing to further the use of copyrighted works for the socially valuable fair use purposes identified in the Copyright Act of “criticism, comment, news reporting, teaching … scholarship, or research.”

 

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