In a hearing today for the copyright lawsuit filed by CoStar against Zillow, Judge Edgardo Ramos of the Southern District of New York ordered both parties to submit more detailed arguments regarding the proper venue for the lawsuit, with CoStar previewing how it will allege Zillow is responsible for what the company claimed “may be a record” for infringement of copyrighted images.
Nicholas Boyle, speaking on behalf of CoStar, said that the case involves “more than a quarter of a million instances of infringement on Zillow.com” from allegedly CoStar-copyrighted images that were “collected” in the “few months” before the lawsuit was filed in July.
“This case is about Zillow acting, not Zillow users,” Boyle said.
In the lawsuit, CoStar claims that Zillow used tens of thousands of photos owned by CoStar to grow its rental business. But John Lanham, a lawyer representing Zillow, noted to Ramos at the hearing that the only method CoStar has formerly alleged in the lawsuit for photos added to Zillow’s platforms is “user uploads,” and claimed that CoStar has only specifically identified 6,000 properties out of millions of rental listings on Zillow.
“CoStar could have just reached out to Zillow…and asked that Zillow take down images that it is claiming to be copyrighted. It didn’t; it chose to file this lawsuit instead, so here we are before the court,” Lanham said.
The lawsuit and public criticism represents another high-profile spat between CoStar and one of its portal rivals. Long dominant in the commercial space, CoStar has made no secret of its ambitions to supplant Zillow with its own company, Homes.com, as the leading residential real estate portal, and CoStar Group Founder and CEO Andy Florance has publicly lambasted the “Ziltor” (a portmanteau of Zillow and Realtor®.com) business model of selling leads.
In previous court filings, Zillow has accused CoStar of using the litigation to seek a competitive advantage and described the lawsuit as without foundation, while CoStar has pointed out that it has invested hugely in its image database and needs to vigorously enforce copyright protections.
The case is still in the early stages, with Ramos setting a schedule for the parties to argue over the proper venue for the case—with CoStar preferring New York, and Zillow requesting a transfer close to its headquarters in Seattle. CoStar has asked for unspecified damages and a court order that Zillow “willfully” infringed on the company’s copyright.
There also appears to still be fundamental disagreements about the foundations of the case. While CoStar previously acknowledged that at least some photos were likely uploaded by property owners, it has also alleged both direct copyright infringement as well as “vicarious” infringement, essentially claiming that Zillow both actively and passively violated CoStar copyright.
Boyle provided more specifics at the hearing regarding what that alleged wrongdoing looks like, saying that Zillow’s “claim pages,” where owners can “claim” their property, often feature CoStar-copyrighted images that are meant to bring owners or managers in as Zillow customers.
“Zillow often uses CoStar’s professionally shot imagery to attract customers to claim that building,” Boyle said. “Zillow then sells the customers advertising…and then provides the CoStar images to the customer, not the other way around, in order for the customer to use those in the advertising (of the property).”
But CoStar has not said how it believes the images originally came to be on Zillow platforms, with Boyle saying the claim pages are “one of the ways” Zillow actively infringes on CoStar copyright without further details. Zillow has previously noted that it requires customers to affirm they have the legal right to license photos uploaded to Zillow, and that it has processes in place for copyright owners to request images be removed.
CoStar has also focused on how the alleged copyright infringement intersected with Zillow’s marketing efforts in the rental space, while Lanham said he believes the case is about “website functionality.”
Back and forth
Ramos also asked both parties direct questions on their initial arguments. On the venue question, he noted that CoStar has represented that the reason why New York is proper is because around 10% of the properties with allegedly copyrighted photos are within 100 miles of the court, pointing out that several other nearby districts would qualify based on this metric.
Boyle pointed to Zillow offices in New York, while also more generally claiming that New York City is “the most important real estate market in the country.” Zillow has accused CoStar of trying to avoid Seattle due to “unfavorable” copyright precedent in the circuit, which CoStar has strongly denied.
Ramos also posed to Lanham the question of whether or not Zillow had the capability of identifying photos with the CoStar watermark.
Lanham said that CoStar “admitted” that it doesn’t copyright all of its photos, meaning that the watermark is “not something that’s relevant” to the lawsuit or the processing of photos.
Boyle disputed that, admitting that some of the photos in question do not have a CoStar watermark but saying that “CoStar does watermark its images.”
“How some of them—a minority—ended up on Zillow without the watermark, I guess we’ll figure out in discovery,” he said.
