Case 4:20-cv-05640-YGR Document 48 Filed 08/24/20 Page 1 of 8
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
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`EPIC GAMES, INC.,
`Plaintiff,
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`vs.
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`APPLE INC.,
`Defendant.
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`Case No. 4:20-cv-05640-YGR
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`ORDER GRANTING IN PART AND DENYING
`IN PART MOTION FOR TEMPORARY
`RESTRAINING ORDER
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`Re: Dkt. No. 17
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`Plaintiff Epic Games, Inc. (“Epic Games”) brings this action against Apple Inc. (“Apple”),
`alleging violations of the Sherman Act, California’s Cartwright Act, and California’s Unfair
`Competition Law relating to Apple’s App Store policies. Specifically, Epic Games contests
`Apple’s in-app purchase (“IAP”) system through which Apple takes 30% and further prevents its
`game, Fortnite, from offering its own IAP outside of Apple’s system.
`Now before the Court is Epic Games’ motion for a temporary restraining order requesting
`broad relief with respect to all of its products, including those managed by affiliates. Apple
`opposes the motion. Based on a preliminary review of the briefing, the Court permitted a reply on
`the issues relating to the graphics engine, the Unreal Engine, and Apple’s stated intention of
`revoking Epic’s developer tools. The Court heard oral arguments on the motion via the Zoom
`platform on August 24, 2020.
`Having carefully reviewed the parties’ briefing, and the parties’ oral arguments, and for the
`reasons set forth more fully below, the Court GRANTS IN PART and DENIES IN PART Epic’s motion
`for a temporary restraining order.
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`I.
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`BACKGROUND
`Due to the expedited nature of Epic’s motion, the Court only summarizes the facts relevant
`to the disposition of the motion. Thus:
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`Case 4:20-cv-05640-YGR Document 48 Filed 08/24/20 Page 2 of 8
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`Epic Games is a United States-based tech-company that specializes in video games,
`including, as relevant here, the popular multi-platform1 game, Fortnite. Fortnite is structured
`around “seasons,” whereby narratives, themes, and events are introduced for a limited time.
`Cross-platform play is enabled for all users so long as those users remain on the same version of
`the game. Fortnite’s next season starts on Thursday, August 27, 2020, and will require an update
`of the game to play.
`Epic Games International, S.a.r.l (“Epic International”) is a related company based in
`Switzerland and hosts, among others, the Unreal Engine. The Unreal Engine is a graphics engine
`created by Epic International to assist in its development of video games that it later began
`licensing to other developers. The Unreal Engine 4, the current version of the engine on the
`market, is used by third-party developers for the development of video games for both console and
`mobile platforms, including for games currently offered in the iPhone App Store. These third
`parties range from smaller game developers to larger corporations, such as Microsoft Corporation.
`The Unreal Engine has also been used by third parties for architecture projects, film and television
`production, and medical training.
`Apple is a ubiquitous tech-company that makes products ranging from hardware to
`software. Apple, as relevant here, maintains an App Store for the iOS platform that is geared for
`its mobile devices, the iPhones. The App Store allows third-party developers an opportunity to
`create and thereafter sell applications to iPhone users. Apple generally takes 30% of the sale of
`the application or of the IAP made within the third-party application itself. Apple’s agreements
`with developers and the App Store guidelines do not generally permit third-party developers to
`circumvent the IAP system.
`As relevant here, Apple maintains separate developer agreements and developer program
`licensing agreements between Epic Games, Epic International and four other affiliated entities.
`Apple also maintains a separate agreement, “Xcode and Apple SDKs Agreement,” regarding its
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`1 These platforms include Android, iOS, macOS, Windows, Sony Playstation, Microsoft
`Xbox, Nintendo Switch. Fortnite is also available for download through the Epic Games Store.
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`Northern District of California
`United States District Court
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`Case 4:20-cv-05640-YGR Document 48 Filed 08/24/20 Page 3 of 8
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`developer tools (software development kits, or “SDKs”).
`On Thursday, August 13, 2020, Epic Games made the calculated decision to breach its
`allegedly illegal agreements with Apple by activating allegedly hidden code in Fortnite allowing
`Epic Games to collect IAPs directly. In response, Apple removed Fortnite from the App Store,
`where it remains unavailable to the date of this Order. Later that same day, Epic Games filed this
`action and began a pre-planned, and blistering, marketing campaign against Apple.
`The following day, Apple responded sternly. It informed Epic Games that, based on its
`breaches of the App Store guidelines, and the developer program license agreement, it would be
`revoking all developer tools, which would preclude updates for other programs, including the
`Unreal Engine. On Monday, August 17, 2020, Epic Games filed the instant motion. The next
`day, the parties filed a stipulation in the matter, Donald Cameron, et. al. v. Apple Inc., 4:19-cv-
`03074-YGR (“Cameron”), requesting that this action be deemed a related case to Cameron. The
`Court agreed and the matter was reassigned.
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`II.
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`LEGAL STANDARD
`Preliminary injunctive relief, whether in the form of a temporary restraining order or a
`preliminary injunction, is an “extraordinary and drastic remedy,” that is never awarded as of right.
`Munaf v. Geren, 553 U.S. 674, 689-690 (2008) (internal citations omitted). “It is so well settled as
`not to require citation of authority that the usual function of a preliminary injunction is to preserve
`the status quo ante litem pending a determination of the action on the merits.” Tanner Motor
`Livery, Ltd. v. Avis, Inc., 316 F.2d 804, 808 (9th Cir. 1963). A temporary restraining order is “not
`a preliminary adjudication on the merits but rather a device for preserving the status quo and
`preventing the irreparable loss of rights before judgment.” Sierra On-Line, Inc. v. Phoenix
`Software, Inc., 739 F.2d 1415, 1422 (9th Cir. 1984) (citation omitted).
`Requests for temporary restraining orders are governed by the same general standards that
`govern the issuance of a preliminary injunction. See New Motor Vehicle Bd. v. Orrin W. Fox Co.,
`434 U.S. 1345, 1347 n.2 (1977); Stuhlbarg lnt’l Sales Co., Inc. v. John D. Brush & Co., Inc., 240
`F.3d 832, 839 n.7 (9th Cir. 2001). In order to obtain such relief, plaintiffs must establish four
`factors: (1) they are likely to succeed on the merits; (2) they are likely to suffer irreparable harm in
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`Case 4:20-cv-05640-YGR Document 48 Filed 08/24/20 Page 4 of 8
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`the absence of preliminary relief; (3) the balance of equities tips in their favor; and (4) an
`injunction is in the public interest. Winter v. Natural Resources Defense Council. Inc., 555 U.S. 7,
`20 (2008). With respect to the success on the merits and balance of harms factors, courts permit a
`strong showing on one factor to offset a weaker showing on the other, so long as all four factors
`are established. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011).
`In other words, “if a plaintiff can only show that there are serious questions going to the merits – a
`lesser showing than likelihood of success on the merits – then a preliminary injunction may still
`issue if the balance of hardships tips sharply in the plaintiff’s favor, and the other two Winter
`factors are satisfied.” Shell Offshore, Inc. v. Greenpeace, Inc., 709 F.3d 1281, 1291 (9th Cir.
`2013) (citations and quotations omitted).
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`III. ANALYSIS
`The Court evaluates most of the factors through the lens of Apple’s actions with respect to
`(i) Epic Games specifically, including the delisting of Fortnite and other games authorized under
`Epic Games’ contract with Apple, and (ii) the anticipated suspension/termination of developer
`rights authorized under other contracts, such as the one with Epic International.
`Likelihood of Success on the Merits: Epic brings ten claims for violations of Sherman Act,
`the California Cartwright Act, and California Unfair Competition. Based on a review of the
`current limited record before the Court, the Court cannot conclude that Epic has met the high
`burden of demonstrating a likelihood of success on the merits, especially in the antitrust context.
`However, the Court also concludes that serious questions do exist. Indeed, the Court related this
`action to the Cameron action because there are overlapping questions of facts and law, including
`substantively similar claims based on the same Apple App Store policies: namely, the 30% fee
`that Apple takes from developers through each application sale and IAP in the application.
`Compare Cameron, Consolidated Complaint, Dkt. No. 53 with Epic Games, Inc. v. Apple Inc.,
`Complaint, Dkt. No. 1. The Court considers this context in weighing the other factors.
`Irreparable Harm: The issue of irreparable harm focuses on the harm caused by not
`maintaining the status quo, as opposed to the separate and distinct element of a remedy under the
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`Case 4:20-cv-05640-YGR Document 48 Filed 08/24/20 Page 5 of 8
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`likelihood of success factor.2 Here, the Court’s evaluation is guided by the general notion that
`“self-inflicted wounds are not irreparable injury.” Al Otro Lado v. Wolf, 952 F.3d 999, 1008 (9th
`Cir. 2020) (quoting Second City Music, Inc. v. City of Chicago, 333 F.3d 846, 850 (7th Cir.
`2003)). Further courts generally decline to find irreparable harm that “results from the express
`terms of [the] contract.” See Salt Lake Tribune Publ’g Co., LLC v. AT&T Corp., 320 F.3d 1081,
`1106 (10th Cir. 2003) (no irreparable harm where the alleged harm “results from the express terms
`of [the] contract”). At its core, irreparable harm is harm or injury that cannot be repaired.
`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
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`2 Indeed, the cases mentioned in passing during the August 24, 2020 hearing and
`unbriefed by Epic do not appear to change the analysis. These cases stand for the proposition that
`the doctrines of unclean hands and in pari delicto are not recognized as a defense to antitrust
`claims. See generally Memorex Corp. v. Int’l Bus. Mach. Corp., 555 F.2d 1379,1381 (9th Cir.
`1977); Perma Life Mufflers, Inc. v. Int’l Parts Corp., 392 U.S. 134, 140 (1968). See also Kaiser
`Steel Corp. v. Mullins, 455 U.S. 72, 83-84 (1982) (enforcement of “private agreements” is subject
`to “the restrictions and limitations of the public policy of the United States”). The issue of
`affirmative defenses is not currently before the Court.
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`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.
`Balance of Equities: The battle between Epic Games and Apple has apparently been
`brewing for some time. It is not clear why now became so urgent. The Cameron case which
`addresses the same issues has been pending for over a year, and yet, both Epic Games and Apple
`remain successful market players. If plaintiffs there, or here, prevail, monetary damages will be
`available and injunctive relief requiring a change in practice will likely be required. Epic Games
`moves this Court to allow it to access Apple’s platform for free while it makes money on each
`purchase made on the same platform. While the Court anticipates experts will opine that Apple’s
`30 percent take is anti-competitive, the Court doubts that an expert would suggest a zero percent
`alternative. Not even Epic Games gives away its products for free.
`Thus, in focusing on the status quo, 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. The
`parties’ dispute is easily cabined on the antitrust allegations with respect to the App Store. It need
`not go farther. Apple has chosen to act severely, and by doing so, has impacted non-parties, and a
`third-party developer ecosystem. In this regard, the equities do weigh against Apple.
`Public Interest: “[T]he public interest inquiry primarily addresses the impact on non-
`parties.” HiQ Labs, Inc. v. LinkedIn Corp., 938 F.3d 985, 1004 (9th Cir. 2019). “The plaintiffs
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`bear the initial burden of showing that the injunction is in the public interest.” Stormans, Inc. v.
`Selecky, 586 F.3d 1109, 1139 (9th Cir. 2009).
`With respect to the gaming requests, the Court recognizes based on the numerous internet
`postings and comments submitted in the record that Fortnite players are passionate supporters of
`the game, and eagerly anticipate its return to the iOS platform. The Court further recognizes that
`during these coronavirus pandemic (COVID-19) times, virtual escapes may assist in connecting
`people and providing a space that is otherwise unavailable. However, the showing is not sufficient
`to conclude that these considerations outweigh the general public interest in requiring private
`parties to adhere to their contractual agreements or in resolving business disputes through normal,
`albeit expedited, proceedings. See S. Glazer’s Distrib. of Ohio, LLC v. Great Lakes Brewing Co.,
`860 F.3d 844, 853 (6th Cir. 2017) (declining to enjoin termination of contract according to its
`terms because the “public has a strong interest in holding private parties to their agreements”).
`With respect to the Unreal Engine and the developer tools, the calculus changes. The
`record shows potential significant damage to both the Unreal Engine platform itself, and to the
`gaming industry generally, including on both third-party developers and gamers. The public
`context in which this injury arises differs significantly: not only has the underlying agreement not
`been breached, but the economy is in dire need of increasing avenues for creativity and
`innovation, not eliminating them. Epic Games and Apple are at liberty to litigate against each
`other, but their dispute should not create havoc to bystanders. Certainly, during the period of a
`temporary restraining order, the status quo in this regard should be maintained.
`Weighing of Factors: In sum, the Court finds that based upon the record before it, the
`Winter factors weigh against granting a temporary restraining order based on Epic Games’
`requests as to Fortnite and other games and in favor of granting a temporary restraining order
`based as to the Unreal Engine and other effected developer tools.
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`IV. CONCLUSION
`Accordingly, for the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART
`the motion for a temporary restraining order.
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`Case 4:20-cv-05640-YGR Document 48 Filed 08/24/20 Page 8 of 8
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`THEREFORE, APPLE AND ALL PERSONS IN ACTIVE CONCERT OR PARTICIPATION WITH
`APPLE, ARE TEMPORARILY RESTRAINED from taking adverse action against Epic Games with
`respect to restricting, suspending or terminating any affiliate of Epic Games, such as Epic
`International, from Apple’s Developer Program, including as to Unreal Engine, on the basis that
`Epic Games enabled in-app payment processing in Fortnite through means other than IAP or on
`the basis of the steps Epic took to do so.
`For the reasons set forth above, and the parties’ agreed-upon briefing schedule, this
`temporary restraining order is EFFECTIVE IMMEDIATELY and will remain in force until the Court
`issues an order on the motion for preliminary injunction. Neither party has requested a security
`bond and the Court finds that none is necessary as contemplated under Fed. R. Civ. P. 65(c). See
`Connecticut Gen. Life Ins. Co. v. New Images of Beverly Hills, 321 F.3d 878, 882 (9th Cir. 2003)
`(“The district court is afforded wide discretion in setting the amount of the bond, . . . and the bond
`amount may be zero if there is no evidence the party will suffer damages from the injunction.”).
`Finally, as discussed at the August 24, 2020 hearing and reflected in the minutes therein,
`the Court ORDERS a briefing schedule on a motion for preliminary injunction as follows:
`1. Motion for preliminary injunction filed on or before September 4, 2020;
`2. Response to motion for preliminary injunction filed on or before September 15, 2020;
`3. Reply in support of motion for preliminary injunction filed on or before September 18,
`2020; and
`4. Hearing on the motion for preliminary injunction is set for Monday, September 28, 2020
`at 9:30 a.m. PDT via the Zoom platform. The link will be posted on the docket.
`This Order terminates Docket Number 17.
`IT IS SO ORDERED.
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`Dated: August 24, 2020
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`YVONNE GONZALEZ ROGERS
`UNITED STATES DISTRICT JUDGE
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