Apple Inc won a one-day reprieve from the Supreme Court on Aug 12 as Justice Elena Kagan paused proceedings before a California trial court in the iPhone maker’s long-running antitrust feud with Fortnite-maker Epic Games Inc.
The administrative stay issued by Kagan is designed to give the high court more time to consider Apple’s request for a longer-term stop to additional lower court action in the case. Absent the Supreme Court’s order, Apple would have needed to make a filing with the US District Court for the Northern District of California by Aug 12 afternoon. Kagan paused proceedings until 5:00 pm Washington time on Aug 13.
In June, the Supreme Court agreed to review a judge’s civil-contempt finding against Apple for willfully defying a 2021 injunction involving developer fees for its lucrative App Store. Apple sought review after a federal appeals court upheld the contempt filing. The case is likely be argued in December, though the court hasn’t yet set a date.
In an emergency filing to the justices on Aug 12, Apple argued that trial court proceedings should be stayed while the Supreme Court considers the case since a ruling by the justices could render further hearings moot. The company argued that if the justices find the earlier contempt ruling was flawed, any further proceeding on its fees wouldn’t be necessary.
US District Judge Yvonne Gonzalez Rogers, who has been overseeing the case for the past six years, denied a similar request by Apple for a pause on Aug 11. In her order, Rogers said the Supreme Court’s decision to hear Apple’s appeal "does not substantially impact the factual issues that must be resolved to ensure compliance with the injunction.”
The current proceedings are an offshoot from the original case filed by Epic in 2020. In the initial litigation, Gonzalez Rogers found the App Store – which generates billions of dollars annually from commissions Apple takes from developers on digital sales – didn’t run afoul of federal antitrust laws.
However, the judge determined that the company violated California law and ordered Apple to allow developers to direct consumers to cheaper payment options online. The decision was upheld by the 9th US Circuit Court of Appeals and left in place by the Supreme Court.
In response, Apple allowed developers to point users to the web for transactions, but it imposed a new 27% commission on revenue generated that way. Epic then accused Apple of flouting the 2021 ruling with the new fee.
Following a series of hearings, Gonzalez Rogers found Apple violated her earlier ruling and ordered the company to stop charging commissions on purchases outside its software marketplace. Gonzalez Rogers also referred the case to federal prosecutors to investigate whether Apple committed criminal contempt of court.
The 9th Circuit upheld Gonzalez Rogers’ contempt finding, but directed the judge to consider "appropriate” compensation for Apple from developers for use of its intellectual property – just not at the 27% level that the company initially imposed. The appeals court ordered Gonzalez Rogers to hold further hearings to determine an appropriate rate. – Bloomberg
