Zillow Claims Costar Is ‘weaponizing Litigation’ To Reduce Competition

While CoStar was making claims that Zillow is continuing to “brazenly” violate copyright laws by displaying CoStar-owned images on its site, Zillow had its own statements to make.

On Monday and Tuesday, Zillow filed two letters addressed to Judge Edgardo Ramos, a U.S. District Court judge in the Southern District of New York. The letters are Zillow’s latest filings in a lawsuit dating back to late July, in which CoStar accuses Zillow of “rampant” copyright infringement of listing photos. The complaint claims that Zillow’s unauthorized use of CoStar images amounts to one of the largest real estate image infringement cases in history.

In the first letter, Zillow requests that the case be transferred to the U.S. District Court for the Western District of Washington, where Zillow claims it “should have been filed originally.”

Zillow says the suit should have been filed in Washington because it is a Seattle-based firm and “majority of likely Zillow witnesses are located around Seattle, with others situated along the West Coast.” 

“The CoStar companies are Delaware corporations based in Virginia, have an office in Seattle, and have shown no connection with this District. The Zillow Terms of Use, to which CoStar is subject, provide for exclusive venue in Washington. CoStar presumably chose this forum to avoid unfavorable Ninth Circuit law, a tactic that should not be given weight,” the letter, filed on Monday, states. 

The second letter, which was filed on Tuesday, is a request for a pre-motion conference on Zillow’s motion to dismiss the case. In the letter, Zillow claims that “CoStar has not pleaded that Zillow’s alleged infringement was volitional, a foundational requirement of direct copyright infringement.” 

“Nor has it plausibly alleged that Zillow had the practical ability to police the copyright status of images uploaded to its websites or that Zillow derived a direct financial benefit from the alleged infringement, as required for its vicarious infringement claim,” the letter states.

In addition to these two requests, Zillow also uses the letters to share some thoughts about CoStar and its lawsuit. 

In Monday’s letter, Zillow claims that the lawsuit is “CoStar’s latest attempt to weaponize copyright litigation for competitive pressure, consistent with its history of filing suits against industry rivals.” A similar claim was made on Tuesday, with Zillow stating that the lawsuit is “not about protecting copyright,” but instead is about “CoStar’s effort to use litigation to stifle competition and innovation.”

“Zillow operates a growing and dynamic rentals platform that helps landlords, brokers, and agents connect with prospective tenants, including by allowing them to upload photographs of their listings,” the letter from Tuesday states.

“CoStar filed this case because Zillow’s success — driven by lawful competition and a superior product — threatens its position as one of the most powerful players in the online residential rental market. Instead of competing on the merits, CoStar seeks to misuse copyright law to reduce choice and harm consumers in the process.”

The filings also note that the photos at the center of the lawsuit were provided by customers who attest that they have a right to grant Zillow a license for their use. Additionally, Zillow policy allows for copyright owners to request that their images be removed from the site. 

“Rather than use this system, CoStar chose to shift the burden to the courts and file the instant suit without prior notice to Zillow. CoStar has not adequately pleaded its claims and Zillow will seek a pre-motion conference on a motion to dismiss,” Monday’s letter stated. 

In an emailed statement, CoStar founder and CEO Andy Florance called this a “shameful attempt” by Zillow “to blame its own customers for its mass misuse of CoStar’s copyrighted photographs,” adding that he found the move “as predictable as it is unconvincing.” 

“Our complaint against Zillow spells out in detail the many ways in which Zillow itself — not its customers — engaged in systematic wrongdoing. Zillow published tens of thousands of CoStar-owned images, including many clearly marked with our watermark, and Zillow profited from those images,” Florance added.

CoStar’s general counsel Gene Boxer also pushed back against Zillow’s claims, stating that the firm brought its “suit to ensure accountability and to protect intellectual property rights that are vital not only to our business, but to the integrity of the real estate marketplace as a whole.”

“Zillow must, and will, be held to account for its wrongdoing,” Boxer added.