There have been further filings since the Epic Games v. Apple preliminary injunction on Monday (which didn't go too well for Epic), and two of them are worth reporting and commenting on.
Let's start with the shorter and simpler one. Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California had said on Monday (part of the hearing was about case management) that she didn't like the idea of having to try two cases between these parties only because one requested a jury trial on its claims (which Apple did with respect to its counterclaims) while the other (Epic) did not. The federal judge would actually have preferred a jury trial as I explained in my report on the PI hearing.
There were three possibilities: the parties could have agreed on a jury trial (which appeared most likely because it would have been the judge's preference); the parties could have disagreed (which would have entailed some bidirectional fingerpointing); but what appeared least likely actually happened, and the parties now both want a bench--not jury--trial (this post continues below the document):
In order to enable this, Apple has to withdraw its request for a jury trial, which it does with Epic's consent.
It's highly speculative why this surprising choice was made. While Apple's in-house litigation department has hugely more experience with high-stakes commercial disputes than Epic, outside counsel for both parties is well-matched. It's just a gut feeling, but this looks like one of the cases in which both parties believe very strongly they're going to win--not the kind of case where a plaintiff has that strong belief but the defendant is trying a long shot and stalling, or where a plaintiff attempts a crapshoot (which often happens in patent cases).
The way the Monday hearing went might have made Apple reasonably comfortable with leaving such determinations as market definition to Judge Gonzalez Rogers (whose reference to a wider games distribution market and whose skepticism regarding Epic's tying claim suggest she may, at least for now, be more inclined to side with Apple on market definition)--and Epic never wanted a jury involved, probably because Apple has more fans, especially in the Bay Area, than the Fortnite maker.
The other filing to discuss here is Epic's answer to Apple's counterclaims (this post continues below the document):
That answer is reasonably focused and not an outright attempt to capitalize on the sequence of events (first the PI hearing, then the deadline for the answer to the counterclaims) in order to file a de facto post-hearing PI brief.
The most interesting procedural information is that Epic "will soon move the Court (pursuant to Federal Rule of Civil Procedure 12(c)) for judgment on Apple's tort claims and on Apple's claim based on the implied covenant of good faith and fair dealing, which fail as a matter of law." If that motion succeeded, there would still be some contractual and competition counterclaims.
An FRCP 12(c) motion is a motion for judgment on the pleadings. It can be brought when pleadings are complete, but before discovery, and without delaying a trial. It's easily confused for a motion to dismiss for failure to state a claim upon which relief can be granted (FRCP 12(b)(6)), but is actually closer to a summary judgment motion. Judgment on the pleadings is possibly only if no material fact is in dispute. Apart from conversion, a theory Judge Gonzalez Rogers said she'd throw out anyway, Apple will presumably defend the counterclaims to be challenged by Epic and will argue that there are material facts in dispute. Epic will then have to convince the court that there is no real dispute, or that the disputed facts aren't material.
In Epic's parallel litigation against Google over the Google Play Store, Epic will soon have to defend its claims against a motion.
Epic's preliminary statement to its defenses against Apple's counterclaims contains a passage that accuses Apple of inconsistent treatment of app developers:
"Epic does not dispute that this competing payment solution was prohibited by contractual provisions that Apple has unlawfully forced on developers like Epic who sell in-app digital content, even though Apple allows numerous other app developers to use competing solutions. Epic also does not dispute that, if Apple's contracts were lawful, all in-app purchases made by Fortnite users on iOS would be subject to Apple's 30% tax, even though Apple has exempted numerous other developers from this tax." (emphases added, except for "Fortnite")
It's key to understand that discriminatory treatment under antitrust law does not mean that there can'be any differences. Treating two parties differently is only discriminatory if there's no justification for doing so, and it can, in fact, even be an antitrust violation to treat two parties the same if different treatment would be warranted. If Apple collected a 30% commission on an Amazon sale of physical goods, it would appear at first sight to treat Amazon the same way as Epic, but structural economic differences between the two types of transactions would raise serious questions.
As for Epic's 28 defenses (throwing in the kitchen sink just like Apple did before), Epic obviously argues once again that Apple's App Store terms are anticompetitive, illegal, and unenforceable. There's one defense, however, that I really find absurd: Epic's 9th defense says that Apple ratified, agreed to, acquiesced in, or consented to (all of which comes down to saying that Apple appeared OK with something) "Epic's alleged conduct, including based on, without limitation, [...] Apple's longstanding acceptance of the hotfix process [...]"
Epic can't be serious about Apple's acceptance of unharmful hotfixes precluding Apple in any way from taking action against an outright breach of its in-app payment provision. Epic's "hotfix" here was just that the server told the client (the Fortnite app) to activate a certain feature that had been hidden from Apple. It wasn't a "fix" or a simple addition of content such as another island on which to have a battle royale. It was simply the remote activation of something that Epic itself says, in the document shown above, "was prohibited by contractual provisions."
Finally, the 28th defense indicates Epic will hold positions taken by Apple "in prior court actions" against Apple in this one, as it "cannot take contrary positions in this litigation." I'm curious at to what this means. Potentially Epic's lawyers, some of whom previously represented Qualcomm against Apple (and the Federal Trade Commission), believe Apple said something in the dispute with Qualcomm that runs counter to what it's saying now when defending itself against Epic.
Share with other professionals via LinkedIn: