US District Judge Yvonne Gonzalez Rogers this week threw out two Apple counterclaims stemming from the company’s antitrust/breach-of-contract court battle with Epic Games over the fate of Fortnite on iOS.
The underlying court case, as regular readers know, stems from Epic’s August attempt to get around Apple’s standard 30% fee on microtransactions by adding an “Epic Direct Payments” option to Fortnite on iOS. Apple considered this a breach of Epic’s development contract and barred the game from the iOS App Store as a result, leading Epic to immediately sue Apple for “anti-competitive conduct.”
This week’s ruling, however, deals with counterclaims filed by Apple in response to that lawsuit. In those counterclaims, Apple argued that the introduction of Epic Direct Payments (which are still available in the iOS version of the game, for people who downloaded it before the App Store removal) amounted to “intentional interference” with Apple’s legitimate business. The company also sought extra punitive damages for what it considers “little more than theft” of the 30-percent commission that it is rightfully owed.
“Although Epic portrays itself as a modern corporate Robin Hood, in reality it is a multi-billion dollar enterprise that simply wants to pay nothing for the tremendous value it derives from the App Store,” Apple stated bluntly in its September motion.
As a matter of law, though, Judge Rogers threw out both of these counterclaims in a Tuesday hearing, telling Apple attorney Anna Casey that the company “is on the losing side of this,” as reported by Courthouse News and Bloomberg.
Casey argued at the hearing that Epic “has funds that should be in Apple’s possession… Epic has abused funds that should be in Apple’s hands.” But Rogers noted that only 30 percent of those funds arguably belong to Apple, and, crucially, that “the 30 percent is in dispute” in the still unsettled case.
As for the “intentional interference” claim, Rogers was not convinced that Epic’s Direct Payment scheme amounted to an “independent wrongful act” separate from the core breach-of-contract issue, as a matter of law. “You can’t just say it’s independently wrongful,” Rogers told Casey, referring to Epic’s conduct. “You actually have to have facts.”
“This is a high-stakes breach of contract case and an antitrust case and that’s all in my view,” Rogers said. And despite Apple’s loss here, those two core elements of the case will continue to be argued as the case moves forward to a trial, with arguments scheduled for May.
“Epic enabled a feature in its app which was not reviewed or approved by Apple, and they did so with the express intent of violating the App Store guidelines that apply equally to every developer who sells digital goods and services,” Apple said in a statement. “Their reckless behavior made pawns of customers, and we look forward to making it right for them in court next May.”