`
`
`
`MARK A. PERRY, SBN 212532
` mark.perry@weil.com
`JOSHUA M. WESNESKI (D.C. Bar No.
`1500231; pro hac vice pending)
`joshua.wesneski@weil.com
`WEIL, GOTSHAL & MANGES LLP
`2001 M Street NW, Suite 600
`Washington, DC 20036
`Telephone: 202.682.7000
`Facsimile: 202.857.0940
`
`MORGAN D. MACBRIDE, SBN 301248
` morgan.macbride@weil.com
`WEIL, GOTSHAL & MANGES LLP
`Redwood Shores Pkwy, 4th Floor
`Redwood Shores, CA 94065
`Telephone: 650.802.3044
`Facsimile: 650.802.3100
`
`MARK I. PINKERT (Fla. Bar No. 1003102; pro
`hac vice pending)
` mark.pinkert@weil.com
`KATHERINE G. BLACK (Fla. Bar No.
`1031465; pro hac vice pending)
` katie.black@weil.com
`WEIL, GOTSHAL & MANGES LLP
`1395 Brickell Avenue, Suite 1200
`Miami, FL 33131
`Telephone: 305.577.3100
`Facsimile: 305.374.7159
`
`THEODORE J. BOUTROUS JR.,
`SBN 132099
`tboutrous@gibsondunn.com
`RICHARD J. DOREN, SBN 124666
`rdoren@gibsondunn.com
`DANIEL G. SWANSON, SBN 116556
`dswanson@gibsondunn.com
`JAY P. SRINIVASAN, SBN 181471
`jsrinivasan@gibsondunn.com
`GIBSON, DUNN & CRUTCHER LLP
`333 South Grand Avenue
`Los Angeles, CA 90071
`Telephone: 213.229.7000
`Facsimile: 213.229.7520
`
`CYNTHIA E. RICHMAN (D.C. Bar No.
`492089; pro hac vice)
` crichman@gibsondunn.com
`GIBSON, DUNN & CRUTCHER LLP
`1050 Connecticut Avenue, N.W.
`Washington, DC 20036
`Telephone: 202.955.8500
`Facsimile: 202.467.0539
`
`RACHEL S. BRASS, SBN 219301
` rbrass@gibsondunn.com
`JULIAN W. KLEINBRODT, SBN 302085
` jkleinbrodt@gibsondunn.com
`GIBSON, DUNN & CRUTCHER LLP
`One Embarcadero Center, Suite 2600
`San Francisco, CA 94111
`Telephone: 415.393.8200
`Facsimile: 415.393.8306
`
`
`Attorneys for Defendant APPLE INC.
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`OAKLAND DIVISION
`Case No. 4:20-cv-05640-YGR
`
`APPLE INC.’S MOTION FOR ENTRY OF
`JUDGMENT ON ITS INDEMNIFICATION
`COUNTERCLAIM
`
`The Honorable Yvonne Gonzalez Rogers
`
`REDACTED VERSION OF DOCUMENT
`SOUGHT TO BE SEALED
`
`Plaintiff, Counter-defendant
`
`EPIC GAMES, INC.
`
`
`v.
`
`APPLE INC.,
`
`
`
`
`Defendant, Counterclaimant
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`APPLE’S MOTION FOR
`ENTRY OF JUDGMENT
`
`
`
`
`CASE NO. 4:20-CV-05640-YGR
`
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`Case 4:20-cv-05640-YGR Document 876 Filed 01/16/24 Page 2 of 35
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`NOTICE OF MOTION
`TO ALL PARTIES HEREIN AND THEIR ATTORNEYS OF RECORD
`PLEASE TAKE NOTICE THAT on March 5, 2024 at 10:00 a.m., or as soon thereafter as the
`matter may be heard by the Court, at the courtroom of the Honorable Yvonne Gonzalez Rogers,
`Courtroom 1 – 4th Floor, United States District Court, 1301 Clay Street, Oakland, California, Apple Inc.
`(“Apple”) will and hereby does move that this Court, pursuant to the mandate of the Ninth Circuit, enter
`judgment ordering Epic Games, Inc. (“Epic”) to pay Apple $73,404,326, plus additional amounts Apple
`is incurring during this ongoing litigation, under the indemnification provision of the Developer Program
`License Agreement. See PX-2619.40 (§ 10).
`This motion is based on this notice and supporting memorandum, the trial record, the appellate
`record, the Declarations of Mark Rollins (Apple), Carlyn Irwin (Cornerstone Research), Mark A. Perry
`(Weil), and Richard M. Pearl, and other information of which the Court may take judicial notice.
`
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`APPLE’S MOTION FOR
`ENTRY OF JUDGMENT
`
`
`i
`
`CASE NO. 4:20-CV-05640-YGR
`
`
`
`Case 4:20-cv-05640-YGR Document 876 Filed 01/16/24 Page 3 of 35
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`
`
`TABLE OF CONTENTS
`
`Page
`
`NOTICE OF MOTION .......................................................................................................................... i
`INTRODUCTION .................................................................................................................................1
`BACKGROUND ...................................................................................................................................3
`A.
`Epic’s Intentional Breach Of The DPLA .......................................................................3
`B.
`Apple’s Entitlement To Indemnification Under The DPLA..........................................8
`LEGAL STANDARD ............................................................................................................................9
`ARGUMENT .........................................................................................................................................9
`I.
`Epic Is Obligated To Indemnify Apple For All Its Expenses and Costs—Without
`Limitation—Arising From or Related To Epic’s Breach ........................................................11
`A.
`Apple Is Entitled To Its “Losses,” Broadly Defined Under The DPLA ......................11
`B.
`Apple Is Also Entitled To Its Losses Under California Law Applicable To
`Post-Judgment Motions For Attorneys’ Fees And Costs .............................................18
`Apple Has Substantiated The Amount Of Its Losses...............................................................20
`A.
`Apple’s Records Show The Fees, Expenses, And Costs Of This Litigation ...............20
`B.
`The Total Amount Is “Reasonable” Under California Law .........................................23
`CONCLUSION ....................................................................................................................................27
`
`II.
`
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`APPLE’S MOTION FOR
`ENTRY OF JUDGMENT
`
`
`ii
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`Case 4:20-cv-05640-YGR Document 876 Filed 01/16/24 Page 4 of 35
`
`
`
`TABLE OF AUTHORITIES
`
`Cases Page(s)
`
`Armada Bulk Carriers v. ConocoPhillips Co.,
`505 F. Supp. 2d 621 (N.D. Cal. 2007) .....................................................................................13
`
`Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co.,
`47 Cal. App. 4th 464 (1996) ..............................................................................................11, 20
`
`Bardin v. Lockheed Aeronautical Sys. Co.,
`70 Cal. App. 4th 494 (1999) ....................................................................................................13
`
`Butler-Rupp v. Lourdeaux,
`154 Cal. App. 4th 918 (2007) ..................................................................................................14
`
`Calvo Fisher & Jacob LLP v. Lujan,
`234 Cal. App. 4th 608 (2015) ............................................................................................24, 25
`
`Cap. Bank, PLC v. M/Y Birgitta,
`2010 WL 4241584 (C.D. Cal. Oct. 18, 2010) ..........................................................................12
`
`Cheema v. L.S. Trucking, Inc.,
`39 Cal. App. 5th 1142 (2019) ..................................................................................................18
`
`Children’s Hospital & Med. Ctr. v. Bonta,
`97 Cal. App. 4th 740 (2002) ....................................................................................................26
`
`Crawford Fitting Co. v. J. T. Gibbons, Inc.,
`482 U.S. 437 (1987) .................................................................................................................11
`
`Doppes v. Bentley Motors, Inc.,
`174 Cal. App. 4th 967 (2009) ..................................................................................................15
`
`Eastwood Ins. Servs., Inc. v. Titan Auto Ins. of N.M., Inc.,
`2010 WL 11595919 (C.D. Cal. Nov. 23, 2010) .......................................................................14
`
`Eden Twp. Heathcare Dist. v. Eden Med. Ctr.,
`220 Cal. App. 4th 418 (2013) ..................................................................................................19
`
`Fed–Mart Corp. v. Pell Enters., Inc.,
`111 Cal. App. 3d 215 (1980) ...................................................................................................20
`
`Finjan, Inc. v. Juniper Network, Inc.,
`2021 WL 3674101 (N.D. Cal. May 20, 2021) .........................................................................14
`
`Ford v. Baroff (In re Baroff),
`105 F.3d 439 (9th Cir. 1997) ...................................................................................................19
`
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`APPLE’S MOTION FOR
`ENTRY OF JUDGMENT
`
`
`iii
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`CASE NO. 4:20-CV-05640-YGR
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`Case 4:20-cv-05640-YGR Document 876 Filed 01/16/24 Page 5 of 35
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`
`Gabourel v. Bouchard Transp. Co.,
`1996 WL 447991 (S.D.N.Y. Aug. 7, 1996) .............................................................................12
`
`Goldberg v. Mallinckrodt, Inc.,
`792 F.2d 305 (2d Cir. 1986).....................................................................................................12
`
`Hadley v. Krepel,
`167 Cal. App. 3d 677 (1986) ...................................................................................................24
`
`Harbour Landing-Dolfann, Ltd. v. Anderson,
`48 Cal. App. 4th 260 (1996) ....................................................................................................14
`
`Hegarty v. Transamerica Life Ins. Co.,
`2021 WL 4899482 (N.D. Cal. Oct. 21, 2021)..........................................................................13
`
`Horsford v. Bd. of Trustees of Cal. State Univ.,
`132 Cal. App. 4th 359 (2005) ..................................................................................................24
`
`Hot Rods, LLC v. Northrop Grumman Sys. Corp.,
`242 Cal. App. 4th 1166 (2015) ..........................................................................................11, 17
`
`Hsu v. Abbara,
`9 Cal. 4th 863 (1995) ...............................................................................................................19
`
`Int’l Billing Servs., Inc. v. Emigh,
`84 Cal. App. 4th 1175 (2000) ..................................................................................................25
`
`J.P. Morgan Sec., LLC v. Baumann,
`2015 WL 13916932 (C.D. Cal. Dec. 1, 2015) ...........................................................................9
`
`Ketchum v. Moses,
`24 Cal. 4th 1122 (2001) ...........................................................................................................23
`
`In re Khaury,
`2012 WL 2373655 (Bankr. N.D. Cal. June 22, 2012) .............................................................13
`
`Lovell v. Chandler,
`303 F.3d 1039 (9th Cir. 2002) .................................................................................................12
`
`M.C. & D. Capital Corp. v. Gilmaker,
`204 Cal. App. 3d 671 (1988) ...................................................................................................14
`
`Martinez v. Extra Space Storage, Inc.,
`2013 WL 6623889 (N.D. Cal. Dec. 16, 2013) ...........................................................................9
`
`Metavante Corp. v. Emigrant Sav. Bank,
`619 F.3d 748 (7th Cir. 2010) ...................................................................................................24
`
`Minor v. Christie’s, Inc.,
`2011 WL 902235 (N.D. Cal. Jan. 29, 2011) ............................................................................14
`
`APPLE’S MOTION FOR
`ENTRY OF JUDGMENT
`
`
`iv
`
`CASE NO. 4:20-CV-05640-YGR
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`
`Moore v. Jas. H. Matthews & Co.,
`682 F.2d 830 (9th Cir. 1982) ...................................................................................................24
`
`Morales v. Trans World Airlines, Inc.,
`504 U.S. 374 (1992) .................................................................................................................17
`
`Moreno v. City of Sacramento,
`534 F.3d 1106 (9th Cir. 2008) .................................................................................................24
`
`Nemecek & Cole v. Horn,
`208 Cal. App. 4th 641 (2012) ..................................................................................................26
`
`Orozco v. WPV San Jose, LLC,
`36 Cal. App. 5th 375 (2018) ....................................................................................................25
`
`Pearson v. U.S. Bank Nat’l Ass’n,
`2017 WL 8186764 (C.D. Cal. Aug. 14, 2017) .........................................................................12
`
`Peter v. NantKwest, Inc.,
`140 S. Ct. 365 (2019) ...............................................................................................................12
`
`PLCM Grp. v. Drexler,
`22 Cal. 4th 1084 (2000) ...........................................................................................................23
`
`Quevedo v. New Albertsons, Inc,
`2015 WL 10939716 (C.D. Cal. May 27, 2015) .......................................................................20
`
`Reynolds Metals Co. v. Alperson,
`25 Cal. 3d 124 (1979) ..............................................................................................................20
`
`Roman v. Queen Mary,
`2002 WL 787769 (Cal. Ct. App. Apr. 29, 2002) .....................................................................14
`
`San Francisco CDC LLC v. Webcor Constr. L.P.,
`62 Cal. App. 5th 266 (2021) ....................................................................................................18
`
`Santisas v. Goodin,
`17 Cal. 4th 599 (1998) .......................................................................................................11, 12
`
`Scholastic Inc. v. M/V Kitano,
`362 F. Supp. 2d 449 (S.D.N.Y. 2005)......................................................................................12
`
`Silver Creek, LLC v. BlackRock Realty Advisors, Inc.,
`173 Cal. App. 4th 1533 (2009) ................................................................................................19
`
`Singh v. Hancock Nat. Res. Grp., Inc.,
`2017 WL 2275029 (E.D. Cal. May 25, 2017) .........................................................................13
`
`Skrbina v. Fleming Companies,
`45 Cal. App. 4th 1353 (1996) ..................................................................................................13
`
`APPLE’S MOTION FOR
`ENTRY OF JUDGMENT
`
`
`v
`
`CASE NO. 4:20-CV-05640-YGR
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`
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`Case 4:20-cv-05640-YGR Document 876 Filed 01/16/24 Page 7 of 35
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`
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`Stonebrae, L.P. v. Toll Bros., Inc.,
`2011 WL 1334444 (N.D. Cal. Apr. 7, 2011) ...........................................................................24
`
`Stratton v. Beck,
`30 Cal. App. 5th 901 (2019) ....................................................................................................25
`
`Tax Servs. of Am., Inc. v. Mitchell,
`2008 WL 2834271 (D. Colo. July 21, 2008) ...........................................................................12
`
`Thrifty Payless, Inc. v. Mariners Mile Gateway, LLC,
`185 Cal. App. 4th 1050 (2010) ..........................................................................................11, 13
`
`Travelers Indem. Co. v. Crown Corr, Inc.,
`2012 WL 2798653 (D. Ariz. July 9, 2012) ..............................................................................13
`
`Travelers Indem. Co. v. Lara,
`84 Cal. App. 5th 1119 (2022) ..................................................................................................19
`
`Turner v. Schultz,
`175 Cal. App. 4th 974 (2009) ..................................................................................................20
`
`W. Va. Univ. Hosps., Inc. v. Casey,
`499 U.S. 83 (1991) ...................................................................................................................12
`
`Windsor Pac. LLC v. Samwood Co.,
`213 Cal. App. 4th 263 (2013) ..................................................................................................11
`
`Xuereb v. Marcus & Millichap, Inc.,
`3 Cal. App. 4th 1338 (1992) ........................................................................................11, 12, 18
`
`Statutes
`
`Cal. Civ. Code § 1717(a) ...............................................................................................9, 18, 19, 20
`
`Cal. Civ. Code § 1717.5(a) ............................................................................................................19
`
`Cal. Civ. Proc. Code § 1021 ....................................................................................................11, 12
`
`Other Authorities
`
`Black’s Law Dictionary (5th ed. 1979)..........................................................................................17
`
`Fed. R. Civ. P. 54(d)(2)(B)(iii) ........................................................................................................9
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`ENTRY OF JUDGMENT
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`Case 4:20-cv-05640-YGR Document 876 Filed 01/16/24 Page 8 of 35
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`INTRODUCTION
`When Epic Games, Inc. entered into the Developer Program License Agreement (“DPLA”) with
`Apple in 2010, it agreed to indemnify Apple for “any and all claims, losses, liabilities, damages, taxes,
`expenses and costs, including without limitation, attorneys’ fees and court costs (collectively, ‘Losses’),
`incurred by [Apple] and arising from or related to . . . [Epic’s] breach of any certification, covenant,
`obligation, representation or warranty in [the DPLA], including Schedule 2.” PX-2619.40 (DPLA § 10).
`Only a few weeks after it renewed the DPLA in 2020, Epic willfully breached the contract as part of a
`multifaceted and worldwide attack against Apple and the iOS App Store.
`One front in Epic’s war against Apple was the lawsuit it filed against Apple in this Court. In that
`suit, Epic sought to have key provisions of Apple’s DPLA—including Apple’s right to collect a
`commission on in-app purchases of digital content—declared void and unenforceable under the antitrust
`laws. At trial, however, Epic lost on all of its antitrust claims, and Apple prevailed on its counterclaim
`for Epic’s breach of contract. This Court found that Epic had intentionally breached the DPLA, even
`though (as the Court further found) it was not necessary for Epic to do so to bring this lawsuit. The
`Ninth Circuit affirmed the judgment in favor of Apple on Epic’s antitrust claims and Apple’s breach-of-
`contract counterclaim, and it held that Apple is entitled to recover its “Losses” arising from or related to
`Epic’s breach under the indemnification provision in the DPLA. The court of appeals remanded solely
`for this Court to determine the amount of such Losses.
`Because the DPLA’s indemnification provision defines Losses broadly as “any and all . . .
`expenses and costs, including without limitation, attorneys’ fees and court costs,” Apple is entitled to
`recover all of its out-of-pocket expenses and costs arising from Epic’s lawsuit. That includes all
`expenditures defending against Epic’s claims, at both the trial and appellate level, as well as Apple’s
`ongoing litigation of its indemnification counterclaim on remand. Further, under the plain terms of the
`DPLA, recoverable Losses encompass all of Apple’s litigation “expenses . . . without limitation”—a
`term that includes not only attorneys’ fees and court costs, but also expert fees, vendor costs, travel
`expenses, and other outlays actually made in connection with the litigation.
`Apple has spent a total of $81,560,362 to defend against the United States litigation, from its
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`APPLE’S MOTION FOR
`ENTRY OF JUDGMENT
`
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`CASE NO. 4:20-CV-05640-YGR
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`inception by Epic in August 2020 through October 31, 2023. By this motion, Apple seeks to recover
`$73,404,326, or 90% of the total amount expended, plus additional amounts Apple is incurring during
`this ongoing litigation. This 10% discount, while not required by the DPLA or California law, recognizes
`that Epic prevailed on 1 of the 10 claims it asserted.
`The total amount of Losses is substantiated in the supporting declarations submitted with this
`motion. Apple attests in its declaration to the amount of attorneys’ fees and other costs that it actually
`paid in connection with this lawsuit to the vendors who submitted invoices directly to Apple.
`Cornerstone Research, a third-party expert in forensic accounting and data analytics, has corroborated
`that total amount based on its independent and extensive review of the billing records maintained by
`Apple and its vendors (including pass-through amounts). Apple and Cornerstone, working with Apple’s
`vendors to understand and/or reconcile billing and payment records, have made various reductions to
`ensure that every dollar sought by this motion falls within the DPLA’s indemnification provision. The
`total amount sought thus reflects both those downward adjustments and the 10% reduction—yielding a
`number below the amount Apple is contractually entitled to:
`Apple’s Actual Payments
`Adjusted Total
`$82,971,401
`$81,560,362
`
`Adjusted Total Minus 10%
`$73,404,326
`
`Although the DPLA contains no reasonableness requirement, the Losses sought by Apple are
`“reasonable” under California law applicable to post-judgment motions for attorneys’ fees and costs.
`The stakes in this lawsuit were enormous, and Apple’s defense was appropriate in light of the challenge
`to Apple’s business model. Apple’s total expenditures are also commensurate with Epic’s own
`substantial investment in the litigation. Both Epic and Apple chose to retain sophisticated law firms,
`multiple experts, and vendors capable of managing the huge quantity of documents and data produced
`in discovery. The declaration of Richard M. Pearl, an expert on California attorneys’ fees and court
`costs, further supports a finding of reasonableness.
`Epic has no legitimate grounds to dispute the amount of Losses sought by Apple. Accordingly,
`the Court should enter judgment on Apple’s indemnification counterclaim in the amount of $73,404,326,
`plus the additional amounts related to the ongoing litigation that Apple has incurred and will continue to
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`APPLE’S MOTION FOR
`ENTRY OF JUDGMENT
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`2
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`incur from October 31, 2023 through final resolution.
`BACKGROUND
`From approximately 2010 until the events that precipitated this lawsuit, Epic was a member of
`Apple’s developer program and was a signatory to the DPLA. That contract contains an express
`indemnification provision that requires each developer (referred to as “You” in the agreement) to
`reimburse Apple for, among other things, “attorneys’ fees and court costs . . . arising from or related to”
`the developer’s “breach” of any part of the DPLA. The indemnification provision reads, in relevant part:
`
`To the extent permitted by applicable law, You agree to indemnify and
`hold harmless, and upon Apple’s request, defend, Apple, its directors,
`officers, employees, independent contractors and agents (each an “Apple
`Indemnified Party”) from any and all claims, losses, liabilities, damages,
`taxes, expenses and costs, including without limitation, attorneys’ fees
`and court costs (collectively, “Losses”), incurred by an Apple Indemnified
`Party and arising from or related to any of the following (but excluding
`for purposes of this Section, any Application for macOS that is distributed
`outside of the App Store and does not use any Apple Services or
`Certificates): (i) Your breach of any certification, covenant, obligation,
`representation or warranty in this Agreement, including Schedule 2 and
`Schedule 3 (if applicable) . . . .
`
`PX-2619.40 (DPLA § 10) (emphases added). The Ninth Circuit has already ruled that Apple is entitled
`to recover its Losses under this provision. The only issue before this Court on remand is the amount of
`such Losses.
`A. Epic’s Intentional Breach Of The DPLA
`Apple’s App Store is a two-sided transaction platform that allows third-party developers of apps
`built using Apple’s proprietary software and technology to engage with consumers who use devices,
`such as iPhones, running Apple’s iOS operating system. Dkt. No. 812 (“Rule 52 Order”), at 28–29, 34.
`Developers who wish to gain access to Apple’s proprietary tools must join the Developer Program. Id.
`at 93 n.462. To develop and distribute iOS apps, developers must also sign and agree to the terms of the
`DPLA. Id. at 28–29. As of the time of trial, all native iOS apps must have been distributed through the
`App Store, and all in-app purchases of digital goods and services must have used Apple’s IAP payment
`mechanism. Id. at 29–33. Apple charges a commission on downloads of paid apps and for transactions
`effected through IAP. Id. at 35–36. The DPLA includes certain “anti-steering” provisions to help Apple
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`APPLE’S MOTION FOR
`ENTRY OF JUDGMENT
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`CASE NO. 4:20-CV-05640-YGR
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`Case 4:20-cv-05640-YGR Document 876 Filed 01/16/24 Page 11 of 35
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`enforce the IAP requirement. Id. at 31; PX-2619.17; PX-2790.10.
`Founded in 1991, Epic is a “multi-billion dollar video game company” and the developer of the
`popular video game, Fortnite. Rule 52 Order at 2–3. In 2010, Epic entered into a DPLA with Apple,
`which allowed Epic to leverage Apple’s developer tools and technology to develop and produce iOS
`games offered through Apple’s App Store. See id. at 18. During the two years Fortnite was on the App
`Store, Epic earned more than $700 million in revenue from iOS users. Id. at 14.
`Despite its commercial success on iOS, Epic had expressed objection to two core Apple policies
`for developers: the requirements that iOS apps be distributed through the App Store and that in-app
`purchases of digital goods and services be executed through IAP. Rule 52 Order at 21, 25. What Epic
`really wants is to avoid paying Apple’s commission. See id. at 92 (“Epic games’ theory [is] that no
`commission should be levied”). In 2019, Epic devised a plan called “Project Liberty” to attack Apple’s
`App Store policies through public relations, lobbying, and litigation. Epic had two primary motivations
`for Project Liberty: first, its pursuit of “tremendous monetary gain and wealth”; second, its desire to
`change the policies and practices of Apple, “which are an impediment to Mr. Sweeney’s [Epic’s CEO]
`vision of the oncoming metaverse.” Id. at 19. As this Court explained, the plan was multifaceted and
`“highly choreographed” (id.), including to the point of having a Cravath antitrust partner, Gary
`Bornstein, embedded at Epic’s headquarters with an Epic e-mail address (Dkt. No. 779-1 ¶ 274.4).
`After renewing its DPLA with Apple on June 30, 2020, Epic sent a letter that same day to Apple
`executives requesting that Apple make “(i) competing payment processing options . . . ; and (ii) a
`competing Epic Games Store app” available through the App Store. Rule 52 Order at 24; Dkt No. 779-
`1 ¶¶ 276–77. On July 10, 2020, Apple declined Epic’s request, noting that not only “has [Apple] never
`allowed this,” but also that doing so would undermine the “safe[ty], secur[ity] and reliab[ility]” of the
`iOS and App Store environments. Rule 52 Order at 24 (citations omitted); Dkt. No. 779-1 ¶¶ 278.1–.4.
`Epic replied a week later, promising to continue its crusade, but never “reveal[ing to Apple] its plans to
`enable an alternate payment system” by subterfuge—despite tipping off Nintendo, Microsoft, and Sony
`to Epic’s impending “fireworks show.” Rule 52 Order at 23, 25 (citations omitted); Dkt. No. 779-1
`¶ 279.
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`APPLE’S MOTION FOR
`ENTRY OF JUDGMENT
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`CASE NO. 4:20-CV-05640-YGR
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`Case 4:20-cv-05640-YGR Document 876 Filed 01/16/24 Page 12 of 35
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`The cornerstone of Epic’s plan was a surreptitious “hotfix” that Epic “introduced . . . into the
`Fortnite version 13.40 update [submitted for App Review] on August 3, 2020.” Rule 52 Order at 25.
`The hotfix “required extensive planning and testing,” including “[s]pecialized engineers” and an
`information security team whose sole purpose was to ensure that Apple’s App Review Team could not
`detect the embedded threat lurking in the version update. Id. at 23; see also Dkt. No. 779-1 ¶ 272 (Epic’s
`Project Liberty team comprised “about 100–200 [of its] employees”), ¶ 274.1 (“Epic ‘investigated’
`various ways it could surreptitiously implement an alternative payment system, ‘like, obfuscating the
`code’ or ‘encrypt[ing]’ the relevant features.”). This secret code “clandestinely enabled substantive
`features in willful violation of [Epic’s] contractual obligations” under the DPLA (Rule 52 Order at 21),
`including “a direct pay option to Epic Games that would be activated when signaled by Epic Games’
`servers” (id. at 25). The hotfix, in short, would “circumvent Apple’s IAP system,” once Epic “activated
`the undisclosed code.” Id.; see also id. at 21–22 (“‘We submit a build to[ ] Apple with the ability to
`hotfix on our payment method. . . . We flip the switch when we know we can get by without having to
`update the client for 3 weeks or so.’” (citing DX-4419.002)). After “intentionally omitt[ing] the full
`extent” of the changes in its “disclosure” to Apple—which relied upon Epic’s misrepresentations in
`approving the new version of Fortnite—Epic triggered the hotfix on August 13, 2020. Id. at 23, 25; Dkt.
`No. 779-1 ¶ 300 (Epic notified Apple at 2:00 AM on August 13, 2020 of the hotfix, only after having
`already activated it).
`As this Court found, by implementing the hotfix, Epic “willful[ly] violat[ed its] contractual
`obligations and guidelines” with Apple, as set out in the DPLA that Epic entered into with Apple in
`2010. Rule 52 Order at 18, 21.
`Apple removed Fortnite from its App Store on August 13, 2020, fewer than ten hours after Epic
`implemented the hotfix. Dkt. No. 779-1 ¶ 301; Rule 52 Order at 25. That day, Apple sent a letter
`notifying Epic that Fortnite had been removed from the App Store due to violations of the App Store
`Review Guidelines. Dkt. No. 779-1 ¶ 302. Apple also explained how Epic could cure its breach:
`removing the alternative payment feature and any other features hidden from Apple; clearly describing
`the changes to Fortnite version 13.40; and resubmitting the new version of Fortnite for review. Id. Epic
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`APPLE’S MOTION FOR
`ENTRY OF JUDGMENT
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`CASE NO. 4:20-CV-05640-YGR
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`Case 4:20-cv-05640-YGR Document 876 Filed 01/16/24 Page 13 of 35
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`responded in an email to Apple executives that threatened Apple would be “in conflict with” Epic on a
`number of fronts—including legal. Id. ¶ 303 (citing DX-3906.002).
`Shortly after triggering the hotfix, Epic sued Apple under Sections 1 and 2 of the Sherman Act,
`the California Cartwright Act, and the California Unfair Competition Law (“UCL”). Epic alleged that
`Apple unlawfully maintained a monopoly over iOS app distribution and in-app payment markets, via the
`App Store and IAP, and sought a declaration and injunction against the challenged DPLA provisions.
`Rule 52 Order at 148, 151–52.
`Apple sent another letter to Epic the following day, on August 14, 2020, providing additional
`detail on how Epic’s hotfix breached its agreements with Apple. Dkt. No. 779-1 ¶ 309. Reminding Epic
`of Apple’s app review process, Apple reiterated its rules regarding user privacy and security, and how
`Epic had violated many provisions of the DPLA. Id. Apple also notified Epic that its membership in
`Apple’s Developer