Judge Tosses Apple Counterclaims Against Fortnite Maker

(Pixabay image via CNS)

OAKLAND, Calif. (CN) — A federal judge late Tuesday dismissed two counterclaims by Apple against Fortnite maker Epic Games, in the popular online game maker’s antitrust lawsuit challenging Apple’s practice of taking a 30% cut on all in-app purchases.

U.S. District Court Judge Yvonne Gonzalez Rogers also ruled Apple “has no basis” for its demand of punitive damages.

Epic Games sued Apple and Google after the tech companies kicked Fortnite off their app stores due to an ongoing dispute over commissions.

The legal dispute began when Epic encouraged its users to pay it directly for in-game upgrades instead of using Apple, which earns a 30% commission on all app payments through its app store.

That policy is at the center of several lawsuits by app developers who claim Apple is using its app store to exert monopolistic power over the market.

Apple countersued for breach of contract, claiming Epic is trying to circumvent the app store’s rules to avoid paying millions of dollars in commissions Apple says it’s owed for sales of Fortnite content. According to Apple, Epic breached the contract by launching its own in-app payments system.

In its counterclaims, Apple also accuses Epic of intentional interference with prospective economic advantage and conversion.

In a motion for judgment on the pleadings filed in advance of Tuesday’s hearing, Epic said “a judgment dismissing these claims will ensure that the case stays focused on the validity of Apple’s agreements and practices. These are the issues on which Epic’s claims and Apple’s contract-based counterclaim depend.”

On Tuesday, Gonzalez Rogers told Apple’s attorney Anna Casey the tech giant “is on the losing side of this.”

“I don’t believe you have a tort action here. I said it before and I’m saying it today,” Gonzalez Rogers said.

As for Apple’s intentional interference claim, Gonzalez Rogers told Casey, “You can’t just say it — you actually have to have facts that support it, and you don’t.”

The judge also said Apple failed to show ownership or right to possession as required for a conversion claim.

Casey compared Epic to hackers and said the game company “has funds that should be in Apple’s possession.”

“Epic has abused funds that should be in Apple’s hands,” Casey said.

But Gonzalez Rogers noted Apple doesn’t own the funds, which belong to Epic — Apple is only entitled to a 30% cut.

She added: “The 30% is in dispute.”

At a hearing last month, Gonzalez Rogers refused to reinstate Epic’s Fortnite game on Apple’s app store. The case is expected to go to trial sometime next year.

Casey and John Karin, Epic’s attorney, didn’t return email requests for comment by press time.

A spokesperson for Apple said in a statement the company beieves Epic’s conduct “should be actionable under California tort law.

“It is clear however that Epic breached its contract with Apple,” the statement continued. “In ways the Court described as deceptive and clandestine, 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. Their reckless behavior made pawns of customers, and we look forward to making it right for them in court next May.”

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