Apple and Epic Games faced each other in the first court hearing of their legal fight, regarding the termination of Epic’s developer account while the legal proceedings continue. The first hearing was held in a public Zoom call due to ongoing restrictions caused by COVID-19.
The case was handled by Judge Yvonne Gonzalez Rogers, she mentioned that the situation could be undone by reverting the app as it was before the direct payment system. While Epic argued about Fortnite to remain in the App Store with the direct payment system, Apple mentioned its reasons to block “accounts of all related parties,” including Unreal Engine that is used by thousands of third-party developers to create games.
Your client created the situation. Your client doesn’t come to this court with clean hands. Epic made a strategically and calculated move to breach, and decided to breach right before a new season. So in my view, you cannot have irreparable harm when you create a harm yourself.
All Epic has to do is take it back to the status quo and no one suffers any harm. And you can have a trial date in the spring. Flip the switch to the way it was August 3rd and return everybody back to where they were.
Epic’s lawyer argued about the social aspects, mentioning how the game helps in communication during the pandemic. Katherine Forrest added, “We can’t go back into an anticompetitive contract. There’s no technical reason it can’t be done, but it’s something the law does not and should not require.”
Apple’s lawyer, Richard Doren put forward his view on how allowing development of the Unreal Engine could transfer Epic’s actions to other entities. “When Apple is dealing with an entity that is breaching its contracts, its practice is to terminate the accounts of all related parties,” Doren said. “The reason Apple does this is so that it doesn’t become a shell game…. The concern is that the misconduct will simply be transferred to another Epic entity.”
Epic claimed that if Unreal Engine gets blocked on Apple’s platforms, developers would discard its usage as developers use it for cross platform development. Going on, Apple’s lawyer said if Epic follows App Store protocols and remove the direct payment option, the matter would be resolved.
At the end of the hearing, Judge Rogers said the legal fight would take a long road, and she plans to provide a ruling on the issue shortly. In a legal document later, she granted a temporary restraining order that will prevent Apple from blocking Epic’s access to Apple’s developer tools for Unreal Engine, but it will not support Fortnite’s restoration back on the App Store.
The judge noted that Epic International is responsible for the Unreal Engine development, which is a different account from Epic Games’ with a separate developer program membership. Epic International’s developer program agreements have not been breached, neither has the account violated any App Store guidelines.
There’s some measure of a lack of competition and high barriers to market entry. That said, there appears to be evidence that everyone that uses these kind of platforms to sell games is charging 30%. Whether Epic likes it, the industry and not just Apple seem to be charging that. Right now, Epic is paying Apple nothing. Epic itself charges third parties. This battle won’t be won or lost on a TRO, and Apple has a reputation of going the distance so it’s not surprising they acted the way they did here, but like I said, they overreached.
This was sufficient to have a result in favor of Unreal Engine, and not in Fortnite’s, which is also what the judge indicated when the hearing kicked off. The temporary restraining order goes into effect immediately and will remain in force until the court issues an order on the motion for preliminary injunction. The hearing for preliminary injunction is scheduled for Monday, September 28, 2020.