Judge Rejects Epic's Temporary Restraining Order Request For Fortnite (But Grants It For The Unreal Engine)

from the and-so-it-goes dept

On Monday there was a... shall we say... contentious first hearing in the antitrust fight/contract negotiation between Apple and Epic over what Apple charges (and what it charges for...) in the iOS app store. The issue for the hearing was Epic's request for temporary restraining orders against Apple on two points: first, it wanted a restraining order that would force Apple to return Fortnite to the app store. Second, was a restraining order on Apple's plan to basically pull Epic's developer license for the wider Unreal Engine.

As the judge made pretty clear would happen during the hearing, she rejected the TRO for Fortnite, but allowed it for the Unreal Engine. The shortest explanation: Apple removed Fortnite because of a move by Epic. So Epic was the cause of the removal. The threat to pull access for the Unreal Engine, however, seemed punitive in response to the lawsuit, and not for any legitimate reason.

More specifically, for a TRO to issue, the key issue is irreparable harm (i.e., you can get one if you can show that without one there will be harm that can't be easily repaired through monetary or other sanctions). But here, as the court notes, Epic, not Apple, created the first mess, and so it can fix it by complying with the contract. So there is no irreparable harm, since it can solve the issue. The opposite is true of the Unreal Engine, though:

The Court finds that with respect to Epic Games’ motion as to its games, including Fortnite, Epic Games has not yet demonstrated irreparable harm. The current predicament appears of its own making. See Second City Music, 333 F.3d at 850 (“Only the injury inflicted by one’s adversary counts for this purpose.”). Epic Games remains free to maintain its agreements with Apple in breach status as this litigation continues, but as the Seventh Circuit recognized in Second City Music, “[t]he sensible way to proceed is for [Epic to comply with the agreements and guidelines] and continue to operate while it builds a record.” Id. “Any injury that [Epic Games] incurs by following a different course is of its own choosing.” Id. Epic Games admits that the technology exists to “fix” the problem easily by deactivating the “hotfix.” That Epic Games would prefer not to litigate in that context does not mean that “irreparable harm” exists.

By contrast, Epic Games has made a preliminary showing of irreparable harm as to Apple’s actions related to the revocation of the developer tools (SDKs). The relevant agreement, the Apple Xcode and Apple SDKs Agreement, is a fully integrated document that explicitly walls off the developer program license agreement. (See Dkt. No. 41-21 at 16.) Apple’s reliance on its “historical practice” of removing all “affiliated” developer accounts in similar situations or on broad language in the operative contract at issue here can be better evaluated with full briefing. For now, Epic International appears to have separate developer program license agreements with Apple and those agreements have not been breached. Moreover, Apple is hard-pressed to dispute that even if Epic Games succeeded on the merits, it could be too late to save all the projects by third-party developers relying on the engine that were shelved while support was unavailable. Indeed, such a scenario would likely lead to nebulous, hard-to-quantify questions, such as, how successful these other projects might have been, and how much in royalties would have been generated, much less the collateral damage to the third-party developers themselves.

This same analysis effectively shows up on the other issues, such as the "balance of equities" question:

... the Court observes that Epic Games strategically chose to breach its agreements with Apple which changed the status quo. No equities have been identified suggesting that the Court should impose a new status quo in favor of Epic Games. By contrast, with respect to the Unreal Engine and the developer tools, the Court finds the opposite result. In this regard, the contracts related to those applications were not breached. Apple does not persuade that it will be harmed based on any restraint on removing the developer tools.

None of this is all that surprising, but it certainly suggests that the judge is not being distracted by Epic turning this whole thing into an anti-Apple marketing campaign.

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Filed Under: antitrust, fortnite, temporary restraining order, tro
Companies: apple, epic


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  • icon
    Samuel Abram (profile), 26 Aug 2020 @ 10:40am

    Seems reasonable

    The judge appears to have made a reasonable decision considering that neither Apple nor Epic have exactly the sterlingest of reputations…

    reply to this | link to this | view in chronology ]

  • icon
    That One Guy (profile), 26 Aug 2020 @ 10:50am

    Whoops

    I can't help but wonder how much Epic was banking on getting a judge dumb enough not to see that it was Epic's actions that got the game pulled and ordering it to be placed back in the app-store until the thing was over, because if the game isn't going to be forced back into the stores then every day that passes Epic 'loses' money and given the huge profits they make from Fortnite that is not going to be a small amount, making this PR stunt suddenly a costly one for Epic that they can't just safely drag out until they 'win'.

    As far as preliminary rulings go this one seems to have nailed it, shooting down Epic's attempt to play the victim while also denying Apple's attempted vindictive response.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 26 Aug 2020 @ 11:52am

      Re: Whoops

      It's about to become more costly, as Epic is updating the game engine tomorrow, which requires updates to the client software to keep it compatible with the servers. This means that all installed iOS Fortnite apps will be useless as of tomorrow. Again, because of Epic's changes to Epic's software. I'm sure they're going to point to this as being Apple's fault in the suits though.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 27 Aug 2020 @ 11:05am

      Re: Whoops

      it was Epic's actions that got the game pulled

      Someone noted elsewhere that this was probably necessary to gain standing. Had Epic not taken those actions or Apple not reacted, Epic wouldn't have gotten far with suing Apple, because the claims would've been hypothetical.

      Epic's statements that this is somehow about user freedom is nothing but PR bullshit. Read their EULAs and tell me they care about freedom. Now that they have standing, it's up to them whether to comply with Apple's terms for reinstatement, while the lawsuit goes on.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 26 Aug 2020 @ 11:12am

    I have to think that Epic went into this expecting to lose the battle, but hopefully win the war. This legal jockeying is just the prelude to the battle.

    I hope that Epic can win the court case, but I think that their actual endgame is the EU taking significant anti-trust actions against Apple. This seems likely because EU regulators tend to look at damage to competitors vs the US focus on damage to customers.

    reply to this | link to this | view in chronology ]

    • icon
      crade (profile), 26 Aug 2020 @ 11:51am

      Re:

      Epic may be completely horrible but they are also completely correct in this case, apple's setup is completely anti competitive and I have never understood how they have been getting away with blocking all competing software sales from it's platform unless they pay Apple for the privilege of competing against them. To me the anti-trust laws seem more like a political tool than anything else.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 26 Aug 2020 @ 12:25pm

        Re: Re:

        Apple's iOS platform is the McDonald's of the mobile device world. How has McDonald's got away with it for decades?

        reply to this | link to this | view in chronology ]

        • icon
          crade (profile), 26 Aug 2020 @ 2:14pm

          Re: Re: Re:

          Franchising is just marketting. Nothing actually ties people to mcdonalds as people are tied to apple through a large investment and long term contracts. People franchise mcdonalds to take advantage of their brand to sell more fast food. People sell software on apple store to get access to people who use iphones because hardware is a large investment not to leverage the apple brand in any way.
          mcd's doesn't have any sort of leverage that could force/push competing fast food vendors to sell through them and give mcds a cut like apple does.

          reply to this | link to this | view in chronology ]

          • icon
            crade (profile), 26 Aug 2020 @ 2:21pm

            Re: Re: Re: Re:

            or put another way, if a franchisee decided to tell mcdonalds to go pound sand and they are going to try to sell their own product without mcds branding to the same customers like Epic tried to do there wouldn't be any way mcds could flip some switch and cut them off from customers who also still eat at mcds

            reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 26 Aug 2020 @ 4:04pm

        Re: Re:

        Here's the argument epic wont win. At the time of phone purchase the buyer has a choice of the phone they want. The product itself is proprietary. If you want to sell in their market you agree to pay a fee. Is this fee higher than other fees for similar markets? No.

        The key is that this is their platform and importantly users choose whether to be on its platform. Epics gonna have a hard time proving this is anti competitive.

        reply to this | link to this | view in chronology ]

        • icon
          crade (profile), 26 Aug 2020 @ 10:07pm

          Re: Re: Re:

          That argument applies to every anti-trust. Just saying you compete somewhere in some other area does hardly means you aren't being anti-competitive. You could be massively colluding with everyone in your industry to shut down all new competition or otherwise cheating left right and center in one area and still say people chose your product over your competition in some other market. It means nothing.

          reply to this | link to this | view in chronology ]

  • identicon
    SirWired, 26 Aug 2020 @ 1:13pm

    How much money will they lose, really?

    Since Battle Royale is Free-to-Play, I'm willing to guess Epic is well-aware of how much of their revenue comes from iOS and Android-primary players, vs. players on consoles or PC's. (How competitive of a player can you be in Battle Royale on a mobile platform?)

    If most FortNite paying customers do most of their playing on other platforms, that may make this legal battle a lot more affordable for Epic.

    reply to this | link to this | view in chronology ]


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