Epic runs the wildly successful battle royale game Fortnite across a variety of platforms, including on Apple’s mobile iOS (what a time we live in!). Fortnite on Apple devices was until August last year distributed through the App Store. In exchange, Apple took a 30% commission of all sales through iOS versions of Fortnite.
Last year, Epic changed the code of Fortnite to allow iOS users to purchase in-game credits directly from Epic thereby bypassing Apple’s commission. In response, Apple removed Fortnite from the App Store within 24 hours.
The contract between Epic (a North Carolina-based company) and Apple (a California-based company) required all disputes to be resolved under Californian law.
Litigation in two countries
In August 2020, Epic commenced proceedings against Apple after Apple pulled Fortnite from the App Store. Apple filed a countersuit alleging breach of contract. The day after commencing its proceedings, and in an apparent attempt to garner public support for its stance, Epic released the video Nineteen Eighty-Fortnite spoofing Apple’s 1984 advertisement.
Separately, on 16 November 2020, Epic also commenced proceedings in the Australian Federal Court alleging that the conduct of Apple (and its Australian subsidiary, Apple Pty Ltd) amounted to contraventions of the Competition and Consumer Act (CCA) and Australian Consumer Law (ACL), including unconscionable conduct, engaging in conduct which substantially lessens competition and exclusive dealing.
If successful, Epic’s suit would permit Australian iOS users to download apps to their iOS devices from locations other than the App Store.
Original decision
Apple successfully sought a stay on the proceedings on the basis the litigation should be carried out in California given the exclusive jurisdiction clause in the contract between Epic and Apple.
Appeal
On 9 July 2021, the Federal Court allowed Epic’s appeal, finding that the primary judge should not have granted the stay.
This means that Epic’s case against Apple and its local subsidiary will proceed in Australia (pending any further appeals). That is, even though the parties had a contractual agreement to deal with disputes in California, the Federal Court held that Epic’s claims under the CCA (which were based on a right under Australian legislation, rather than a right under the contract with Apple) could proceed in Australia. This is a reminder to parties negotiating cross-border agreements that while a jurisdiction clause will govern disputes arising out of the contract, it will not necessarily prevent parties from bringing statute-based claims in other jurisdictions.
For those interested in the legal reasoning behind the Federal Court’s decision in choosing to override the exclusive jurisdiction clause, a more detailed summary is here.
For more information please contact Sarah Gilkes or Ben Cameron.
