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Apple Asks to Revive App Payment Rule During Appeal in Epic Case

Nov. 17, 2021, 4:34 PM

Apple Inc. asked a federal appeals court in San Francisco to delay “precipitous implementation” of an “unlawful and inequitable injunction” requiring major changes to its App Store until the court completes its review of the decision in favor of Fortnite maker Epic Games Inc.

The company’s motion, filed Tuesday, asks the U.S. Court of Appeals for the Ninth Circuit to pump the brakes on a court order barring it from enforcing a rule that requires software makers like Epic—which is currently banned from the App Store—to process all customer payments as “in-app purchases.”

The injunction “will harm customers, developers, and Apple itself,” the motion says. “Apple should not be required to change an integral part of its business model, which has been in place for more than a decade, until this court decides the appeals on the merits.”

The filing came the same day that the judge who issued the injunction, Yvonne Gonzalez Rogers, signed off tentatively on Apple’s separate $100 million class action settlement with developers in the U.S. District Court for the Northern District of California.

That deal also calls for several “structural” changes to the App Store, including pledges by Apple to cap commissions at 15% for small businesses, allow direct communications between developers and their customers, and publish an “annual transparency report.”

Both lawsuits—like a parallel proposed class action on behalf of consumers—accused Apple of maintaining the dominance of its distribution platform partly by preventing developers from “steering” their customers toward payment methods that circumvent the App Store.

After an expedited trial, Rogers rejected Epic’s antitrust claims in September. But she ruled for the gamemaker on its unfair competition claim, finding that Apple’s “anti-steering” policies threatened an “incipient” antitrust violation and blocking the company from enforcing them against developers.

Epic has appealed its antitrust loss. Apple, meanwhile, asked the judge to delay implementation of the nationwide injunction while it appeals that part of her decision.

After she denied the request Nov. 9, Apple turned directly to the Ninth Circuit on Tuesday.

Rogers overreached by “entering a nationwide, class-type injunction in a single-plaintiff case brought by a developer that has no apps on the App Store, proved no harm from the provisions at issue, and did not even directly challenge or seek to enjoin them,” the company’s motion says.

Apple is represented by Gibson, Dunn & Crutcher LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP. Epic is represented by Cravath, Swaine & Moore LLP and Faegre Drinker Biddle & Reath LLP.

Hagens Berman Sobol Shapiro LLP is interim lead counsel for the other developers. Sperling & Slater PC, Saveri & Saveri Inc., and Freed Kanner London & Millen LLC also sit on the plaintiffs’ executive committee.

The cases are Epic Games Inc. v. Apple Inc., 9th Cir., No. 21-16695, motion to stay injunction pending appeal 11/16/21 and Cameron v. Apple Inc., N.D. Cal., No. 19-cv-3074, 11/16/21.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com