Zillow’s $7 Billion Problem: Copyright Infringement or Safe Harbor?

Imagine a friend borrows your car for a week. He promises to bring it back clean and full of gas. Reasonable enough, until you discover he racked up 1,500 miles because, while he wasn’t using it, he let his cousin run Uber shifts with it and pocketed a cut of the fares.

You didn’t agree to that. You agreed to one driver, one purpose. The cousin had no right to free ride on your investment, devalue your property, or make money off your car without permission.

Is it theft? Not quite. But it’s a textbook example of “conversion”—getting hold of something legally to use for a specific purpose, then deploying it in a very different manner.

That, in essence, is what Zillow stands accused of doing to CoStar: Co-opting photos that CoStar put into public view, without authorization, to drive its own profits. The alleged free ride could cost Zillow nearly $7 billion.

The Allegations

CoStar, one of the largest real estate data companies in the world, spent years building “the world’s largest real estate image library,” according to the company’s lawsuit against Zillow. It hired thousands of photographers, watermarked the resulting images, and licenses them under terms that restrict use to authorized platforms.

Yet, according to CoStar’s lawsuit, nearly 47,000 images ended up on Zillow, often with the CoStar watermark obscured or compromised.

Zillow has already started to remove the offending images but otherwise hasn’t responded to the lawsuit.

The Safe Harbor Question

Zillow’s most likely line of defense is the Digital Millennium Copyright Act’s (DMCA) “safe harbor” provision. That law shields platforms from liability for user-generated infringement as long as they act in good faith, don’t directly profit, and promptly remove infringing content once notified.

Congress passed the DMCA in 1998 because the Internet, then in its earliest years, raised a number of thorny issues in copyright law. It was clear even then that we wanted to have e-commerce platforms like eBay (and later, social media sites) on which individual users could post content. But we also knew that if we required the platform owners to police and pre-clear every posting—not just for copyright infringement but for all sorts of potential violations—no such platforms could arise.

The safe harbor came to the rescue—but only to a point. It protects platforms from indirect infringement claims. To the extent that Zillow offers a safe harbor defense, its claim can only be that individual and third-party users posted infringing material on its site without its knowledge—and that when it learned of the problem, it removed the offending material.

The Question of Direct Infringement 

CoStar alleges, however, that Zillow itself, not just third-party users, selected, uploaded, and monetized these images for unclaimed property listings, licensed them to its business partners, and used them to bolster many of its revenue streams. That’s direct infringement, and not subject to the safe harbor.

“Zillow itself uses CoStar’s copyrighted photographs to build webpages for properties that are not actively listed for rent. Zillow then invites owners or property managers to ‘Claim this property’ on these inactive (or ‘unclaimed’) property pages,” the July 30 complaint reads. “After an owner or property manager ‘claims’ a property, Zillow markets rental advertising packages for that property to the property claimant.”

If this claim holds up in court, Zillow’s safe harbor defense will fall flat on its face. The DMCA’s safe harbor defense offers protection from indirect infringement, not direct infringement.

Why It Matters

This case revisits many of the most compelling issues that motivated the DMCA. The Internet empowers users, large and small, to share freely. But what they share is not always their own. The tension between wanting to promote connection and commerce on the one hand, and protecting the rights of creators on the other, is as great as it was in the 1990s.

If wealthy, powerful platforms can shrug off responsibility while systematically exploiting licensed works, innovation and creativity will suffer. The tradeoffs incorporated in the DMCA have hardly strangled e-commerce—and protection against direct infringement remains key.

For the sake of photographers, content creators, and property rights online, the judiciary needs to maintain that balance.

Image Source: Deposit Photos
Author: BlueJay18
Image ID: 253938270