Last Friday, Judge Yvonne Gonzalez Rogers issued a mixed ruling on plaintiff Epic Games, Inc.’s motion for a preliminary injunction against Apple Inc. that asked the court to reinstate its blockbuster game, Fortnite, to the Apple App Store. Apple had removed Fortnite from its App Store on Aug. 28 after finding that Epic breached its licensing agreement and operating guidelines, which Epic admitted to in the instant motion. The court’s ruling is the latest impacting the antitrust lawsuit, originally filed in August, which has become a particularly public and embittered dispute.
In considering whether to grant the preliminary injunction, the court explained that the antitrust questions presented are novel, writing that the suit “challenges the fundamental operation of digital platforms affecting millions of users.” Judge Gonzalez Rogers further noted that preliminary injunctive relief “is an extraordinary measure rarely granted,” and must be approached cautiously after reviewing the full record with the status quo intact.
The court further commented that it was “unwilling to tilt the playing field in favor of one party or the other with an early ruling of likelihood of success on the merits,” as required by the preliminary injunction analysis. Taking two of the lawsuit’s claims, that Apple committed monopoly maintenance under Section 2 of the Sherman Act and tying under Section 1 of the Sherman Act, the court’s analysis proceeded on the underdeveloped record.
As to Epic’s monopoly claims, Judge Gonzalez Rogers held that “while Epic Games raises serious questions on the merits, the Court cannot conclude that Epic Games will likely succeed on the merits of those claims. Too many unknowns remain.” Toeing the line with its late August decision regarding Epic’s request for a temporary restraining order, the court largely denied Epic the preliminary injunction, reasoning that it “cannot simply exclaim ‘monopoly’ to rewrite agreements giving itself unilateral benefit.”
As to Epic’s tying claims, the court engaged in a burden-shifting analysis after Apple proffered procompetitive reasons for purportedly tying in-app purchases to iOS app distribution. Ultimately, the court concluded that it could not adjudge the likelihood of success on the merits of these claims either because “the record is not fully developed, and mixed, at best.”
The court held in Epic’s favor as to Unreal Engine, “a graphics engine created by Epic International to assist in its development of video games that it later began licensing to other developers,” and the Epic Affiliates. The court held that Epic made a sufficient showing of irreparable harm as to these entities because Apple barred the affiliates from using Apple app developer tools without sufficient basis. Specifically, the court ruled that “with respect to access to the developer tools … Apple’s reaching into separate agreements with separate entities appears to be retaliatory, especially where these agreements have not been otherwise breached.”
Thus, the court ordered that, effectively immediately, Apple was preliminarily enjoined from restricting, suspending or terminating the Epic Affiliates from Apple’s Developer Program unless they breached their agreements with Apple or violated the App Store guidelines.
Epic is represented by Faegre, Drinker, Biddle & Reath LLP and Cravath, Swaine & Moore LLP. Apple is represented by Gibson, Dunn & Crutcher LLP and Orrick, Herrington & Sutcliffe LLP.
