Epic Games, Inc. v. Apple Inc.

Background

The court considered a joint discovery letter brief about Apple’s responses to Epic Games’ requests for production. Epic was suing under the federal Sherman Act, the California Cartwright Act, and California Business and Professions Code section 17200. The opinion addressed three discovery disputes.

Non-U.S. documents

Epic sought documents concerning foreign activities across 70 requests for production. Apple had agreed to produce documents referencing both U.S. and non-U.S. activities, as well as documents concerning Epic’s own dealings with Apple outside the United States. Apple refused to produce documents concerning only foreign conduct unrelated to Epic.

The court explained that foreign conduct could sometimes be relevant evidence of domestic conduct. But relevance in discovery is measured against a party’s claims or defenses, and the claims and defenses here arose under U.S. or California law. Epic’s allegation of worldwide markets did not eliminate its obligation to explain how particular foreign documents could prove or disprove those claims or defenses. The court also noted that the Foreign Trade Antitrust Improvements Act generally excludes commercial activities abroad from antitrust liability, subject to exceptions.

The court concluded that Epic had not made the required showing. It therefore denied Epic’s motion to compel Apple to produce documents concerning non-U.S. activities.

Device financial information

Epic’s request for production sought actual and projected revenue, costs, expenses, and profits, by country and year, for the iPhone, iPad, iPod touch, Apple Watch, and Apple AirPods. Epic argued that the information could help show Apple’s market power in alleged markets for mobile operating systems, app distribution, and in-app payment processing.

The court agreed that financial information about devices accessing the App Store was relevant because Epic alleged that Apple had market power in app distribution and in-app payment processing on iOS. But the court found that Apple Watch and AirPods were accessories rather than products accessing the alleged relevant markets. It rejected Epic’s theory that profits from those accessories were sufficiently connected to market power in the app-distribution and in-app-payment markets. The court also found that expanding discovery to competing wearables and headphones would be disproportionate.

The court stated that it granted Epic’s motion in part and denied it in part, and ordered Apple to produce documents responsive to “RFP 33” for the iPhone, iPad, and iPod touch. The opinion’s heading identifies this dispute as “RFP 3,” and the request described in the text is also called “RFP 3” in places.

The court separately applied its foreign-document analysis to the worldwide scope of this request and said Epic had not explained why Apple should produce the information for every country in the world.

In-app purchase information

The opinion’s heading refers to “RFP 54,” while the body calls the request “RFP 5.” The request sought revenue, costs, expenses, investments, including research and development, and profits associated with Apple’s in-app payment system.

The court found the requested information relevant because it concerned profits in one of the alleged relevant markets. It criticized Apple’s statement that it did not have information specifically tied to in-app purchases, because a document cited by Epic showed that Apple tracked revenue associated with in-app purchases. The court ordered Apple to produce revenue information for in-app purchases for the relevant time period.

For the requested costs, expenses, investments, and profits, the court said it did not know whether the information existed. It ordered Apple to produce whatever information it had.

Disposition

The order denied the motion to compel documents concerning non-U.S. activities; granted in part and denied in part the device-financial-information request; ordered production for the iPhone, iPad, and iPod touch; and ordered Apple to produce specified in-app-purchase revenue information and whatever other requested financial information it possessed.