Tuesday, August 18, 2020

First Epic Games v. Apple court clash (videoconference) scheduled for next Monday; Apple has until noon on Wednesday to respond

A few hours ago, I wrote in my post on Epic Games' motion for a temporary restraining order (TRO) against Apple with respect to the removal of Fortnite from the App Store and iOS devices as well as an ultimatum that could lead to the termination of Epic's developer agreement (with implications even for the Unreal Engine used by many other game companies) that "the court is likely to hold a preliminary injunction hearing, possibly on very short notice, or at least a TRO hearing before enjoining Apple in any way." Epic had asked the court to hold a hearing as soon as possible, ideally even on the same day (Monday by local time), but as I looked at how Epic's lawyers described the urgency of the situation, the earliest date that seemed somewhat critical was August 28.

With Apple not having appointed counsel (as this litigation was just brought late last week), a same-day hearing would have been tantamount to an ex parte TRO (an order without hearing the other party), which didn't appear reasonable to me under the circumstances of a lengthy and complex motion on the heels of a complaint that spanned more than 60 pages.

And indeed, Judge Edward M. Chen of the United States District Court for the Northern District of California apparently got the same impression, which is why he set a TRO hearing (to be conducted via Zoom) for Monday, August 24:

"CLERK'S NOTICE SETTING HEARING AND BRIEFING FOR [17] MOTION FOR TEMPORARY RESTRAINING ORDER: Hearing re: [17] MOTION for Temporary Restraining Order and Order to Show Cause Why Preliminary Injunction Should Not Issue and Memorandum of Points and Authorities In Support Thereof set for 8/24/2020 10:00 AM in San Francisco before Judge Edward M. Chen. Opposition due by 8/19/2020, 12:00 noon. No replies. Hearing to be conducted by Zoom Webinar. Information to follow. (This is a text-only entry generated by the court. There is no document associated with this entry.) (afmS, COURT STAFF) (Filed on 8/17/2020)"

That order came down about 20 minutes after my blog post (compare the timestamp of my tweet to the time of the docket entry--3:57 PM Pacific) that predicted there wouldn't be an immediate decision without hearing Apple.

The motion schedule gives Judge Chen a few days to weigh his decision before Apple's threatened termination of Epic's developer agreement would kick in.

It wouldn't even be the end of the world for Epic if a termination of that agreement on the 28th had effect for only a limited period of time (until the court would decide whether to grant a preliminary injunction). The Unreal Engine would continue to run as part of any games that incorporate it, provided that Epic's customers meet their contractual obligations vis-à-vis Apple. As I mentioned twice before, my own app development company is about to launch a game built with Unity (a competitor to Unreal Engine), and we don't depend on Unity's developer agreement either--just on our own.

Therefore, Epic's lawyers won't necessarily be able to convince Judge Chen next week that a TRO is actually needed to prevent the catastrophic harm Epic's motion describes as imminent. Apple may very well be able to convince the court that Epic and its engine licensees would be affected only after a number of months (at least).

Primarily, however, I guess Apple will argue that Epic should simply comply with its contractual obligations until its complaint has been adjudicated. Even if the court(s) ultimately agreed with Epic that Apple's 30% App Store cut (which Epic's complaint calls a "tax") was "supra-competitive," Epic could recover any hypothetical overpayments later. (Epic's complaint specifically doesn't seek damages, presumably because Epic seeks to avoid a jury trial, but that's Epic's choice and relates only to last week's complaint in its current form; Epic could still amend it or bring follow-on complaints.)

The deadline for Apple's response to the TRO motion is quite short: noon on Wednesday (August 19) by Pacific Time. I still haven't seen any appearance of counsel for Apple in this case. But any extension that Apple might request would reduce the amount of time Judge Chen would have to prepare for the Monday hearing. Then, it's just a videoconference, so it could be easily postponed by a day or two.

There are other developments relating to this dispute. According to The Information, Epic Games is trying to forge a coalition of other companies disgruntled with Apple's (and presumably also Google's) app distribution terms. On Twitter, an app developer lists a number of companies who might share some of Epic's views and concerns, but also expresses doubts any of them would throw down the gauntlet to Apple the way Epic did:

A couple of days ago I reported on Facebook's public criticism of a decision made by Apple's App Store department and mentioned how Microsoft, Amazon, and Oracle (the latter only because of its litigation against Google) might benefit from Epic's campaign. In Microsoft's case it's another question how the company's XBox division views this. From what I hear, its third-party developer terms are similar to Apple's. But Office is a higher priority for the Windows company.

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