Epic Games, Inc. v. Apple Inc.

Background

Epic Games sued Apple under the federal Sherman Act, California’s Cartwright Act, and California’s Unfair Competition Law. The claims concerned Apple’s App Store policies, including Apple’s 30% charge on application sales and in-app purchases and its restrictions on third-party payment systems.

Epic Games operates Fortnite. Apple’s agreements and App Store guidelines generally required third-party developers to use Apple’s in-app purchase system. On August 13, 2020, Epic activated code that allowed it to collect in-app payments directly. Apple then removed Fortnite from the App Store. Apple later told Epic that it intended to revoke developer tools, which could have prevented updates to other programs, including the Unreal Engine.

Epic International, a related company based in Switzerland, hosted the Unreal Engine. The engine was used by third-party developers for games and other projects. The court noted that Epic International appeared to have separate developer agreements with Apple and that those agreements had not been breached.

Temporary restraining order standard

A temporary restraining order is emergency relief intended to preserve the existing situation and prevent harm before the court issues a final judgment. The party seeking it must show a likelihood of success on the merits, likely irreparable harm without relief, that the balance of harms favors relief, and that relief serves the public interest. The court evaluates these factors using the same general standards that apply to a preliminary injunction.

Court’s analysis

The court said Epic had not shown a likelihood of success on the merits based on the limited record, particularly given the complexity of the antitrust claims. The court nevertheless found serious questions about the claims, including questions concerning Apple’s 30% charge and App Store policies. The court did not finally decide whether Apple violated antitrust law.

For Fortnite and Epic Games’ other games, the court found that Epic had not shown irreparable harm. It emphasized that Epic had deliberately breached its agreements with Apple and acknowledged that it could deactivate the code enabling outside payments. The court therefore concluded that the harm alleged in connection with the games was, on the record before it, the result of Epic’s own choice.

For the Unreal Engine and related developer tools, the court found a preliminary showing of irreparable harm. It noted that the agreement covering Apple’s developer tools was separate from the developer program license agreement and that possible harm to third-party projects could be difficult to measure or repair later. The court also found that the agreements involving the Unreal Engine and those tools had not been breached.

The court found that the balance of harms and the public interest weighed against relief concerning Fortnite and the other games. It found the opposite as to the Unreal Engine and developer tools because Apple’s proposed action could affect third-party developers, gamers, and the broader gaming industry. The court concluded that the dispute over the App Store did not need to extend to the Unreal Engine and developer tools.

Order

The court granted in part and denied in part Epic’s motion for a temporary restraining order. It temporarily restrained Apple and persons acting with Apple from restricting, suspending, or terminating any Epic affiliate from Apple’s Developer Program, including as to the Unreal Engine, based on Epic Games’ use of non-Apple in-app payment processing in Fortnite or the steps Epic took to enable it.

The order was effective immediately and remained in force until the court issued an order on the motion for a preliminary injunction. The court found that no security bond was necessary, ordered briefing and a hearing schedule for the preliminary-injunction motion, and terminated Docket Number 17.