REX - Real Estate Exchange Inc v. Zillow Inc, 2:21-cv-00312

REX (a real-estate brokerage) sued Zillow under the Lanham Act alleging false advertising based on Zillow’s January 2021 two-tab search design labeled “Agent listings” and “Other listings.”
Zillow’s two-tab change segregated MLS/agent listings from listings sourced outside MLS feeds (e.g., FSBO, non-MLS), and Zillow set the “Agent listings” tab as the default.
REX’s listings were produced by licensed brokers/agents who were not members of the MLSes providing IDX feeds to Zillow, so those listings appeared under Zillow’s “Other listings” tab.
Zillow’s internal research and external user feedback showed many consumers construed “Other listings” to mean non-agent/FSBO listings; usage of the “Other” tab was very low and complaints spiked after the change. Zillow’s FAQ described Agent = MLS agent listings and Other = FSBO/non-MLS and did not explain that some licensed agents may be non-MLS.
The court considered only whether falsity (the first element of a Lanham Act claim) could be decided as a matter of law on partial summary judgment and concluded that, viewed in context, the tab labels are literally false by necessary implication because REX indisputably is an agent/broker yet its listings were placed under “Other.” Summary judgment on falsity was granted for REX.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Zillow’s tab labels are literally false by necessary implication	Labels “Agent listings” vs “Other listings” unambiguously assert a division of agent vs non-agent listings; REX is an agent but was placed under “Other,” so the labels are false	“Other” can mean “additional” or “other/extra” agent listings; context does not render the labels false as a matter of law	Court: Labels, read together and in context, convey agent vs non-agent; literal falsity by necessary implication established as a matter of law
Whether consumer-perception evidence or surveys are required	Zillow’s own research and user complaints show consumers interpreted “Other” as non-agent, supporting falsity	Defendants argued extrinsic surveys are needed for a misleading-but-true theory and pointed to other cases denying summary judgment	Court declined to decide the misleading-but-true theory (a factual inquiry) and relied on literal falsity; record showed no genuine dispute about label meaning
Whether prior rulings or analogous case law defeat summary judgment	REX relied on precedent allowing literal-falsity rulings at summary judgment	Zillow cited prior orders and cases where falsity was not decided for defendants	Court distinguished cited authority (prior order did not address Lanham falsity); ruled literal falsity appropriate here given undisputed facts

Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134 (9th Cir. 1997) (elements and injury framework for Lanham Act false advertising claims)
Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharms. Co., 290 F.3d 578 (3d Cir. 2002) (two-step analysis: identify unambiguous assertion, then determine literal falsity)
Clorox Co. P.R. v. Proctor & Gamble Com. Co., 228 F.3d 24 (1st Cir. 2000) (literal falsity by necessary implication where audience reads claim as explicit fact)
Design Res., Inc. v. Leather Indus. of Am., 789 F.3d 495 (4th Cir. 2015) (applying Novartis two-step approach on summary judgment)
Nat’l Prods., Inc. v. Gamber-Johnson LLC, 699 F. Supp. 2d 1232 (W.D. Wash. 2010) (falsity is generally a question of fact but may be resolved as a matter of law)
Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014) (clarifying standing and scope of injury under Lanham Act)