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

Legal Issues

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.

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