Apple asked the Ninth Circuit to reconsider part of a panel decision that largely affirmed an injunction in the case being brought by Epic Games Inc. that blocked the tech giant from charging developers "prohibitive" commissions on iPhone app purchases made outside its payment systems.
Apple filed a petition Monday seeking a rehearing from the panel, or the full Ninth Circuit, for a December ruling that largely affirmed an injunction mandating changes to its App Store policies, issued after the lower court found that Apple violated a previous order.
The petition said that although the panel held that the injunction can only bar "prohibitive" commissions, or fees so high they prevent developers from linking to cheaper payment options, it also suggested in its ruling that Apple can only recover the direct costs of implementing linked-out purchases.
"Apple respectfully seeks rehearing and, if need be, rehearing en banc on a narrow but extraordinarily important question: whether this court has imposed, and, if so, can impose, a direct-cost-only rate on linked-out purchases on the Apple App Store," Monday's petition said. "That critical question affects not just the judiciary's authority to regulate economic rates, but also an innovator's ability to earn a return on the enormous investment necessary to create and grow a novel marketplace with global reach."
U.S. District Judge Yvonne Gonzalez Rogers issued the original injunction after finding that Apple violated California's unfair competition law by blocking developers from steering app users to outside payment methods.
The judge later found that Apple willfully violated her order barring the antisteering rules by imposing new fees and restrictions, including a 27% commission on purchases made through a link, rather than the 30% it charges for most in-app purchases. She then issued a new injunction that sought to bar Apple from collecting any commissions on the linked purchases.
The Ninth Circuit largely affirmed the new injunction but found it went too far and could only block "prohibitive" commissions that prevent developers from using the links.
Apple's petition Monday said the appeals court also offered some possible courses of action for the lower court on remand, including suggesting that Apple only be able to recover the direct costs of implementing the linked-out purchases, even if a higher commission would not be prohibitive.
The petition said Epic's CEO has even said the ruling only allows for a "de minims commission," which Apple said would resurrect "the zero-commission rule this court reversed."
"To eliminate any doubt on this critical question, Apple asks the panel to clarify that Apple may charge a nonprohibitive commission on linked-out purchases as long as it is not prohibitive, even if such a commission exceeds the amount necessary to recover Apple's 'direct costs' for coordinating such purchases," the petition said.
Apple said California law bars rate-setting to remedy unfair competition violations and said a ruling mandating a direct cost only rate would be rate-setting, "pure and simple."
The petition also said limiting Apple's commissions to its cost of implementing the linked-out purchases would "grossly" undercompensate it for investments made in developing the App Store and other services it provides to developers.
"It would wrongly deprive Apple of the basic economic right to recover a portion of its enormous investment in creating — and sustaining — one of the best, and most important, marketplaces ever created," the petition said. "And it would amount to a judicial takeover of the app economy — a matter far afield from the judiciary's expertise."
Apple said the appeals court should also reconsider applying the injunction to all developers, citing the U.S. Supreme Court's recent ruling in litigation challenging President Donald Trump's birthright citizenship executive order that dealt with nationwide injunctions and their impact on nonparties.
"Epic is the only plaintiff in this case," the petition said. "Yet the panel held that injunctive relief must apply with respect to all developers — even developers that do not wish to link out to the Epic Games store."
Epic launched the high-stakes battle with Apple in 2020, along with a similar case targeting Google LLC over restrictions on apps for Android devices, after getting its popular Fortnite video game intentionally booted from the platforms for violating policies against using outside payments systems.
The original order from Judge Yvonne Gonzalez Rogers followed a bench trial and the rejection of Epic's federal antitrust claims targeting Apple's broader policies that block rival stores and require use of its payment system for in-app purchases. The Supreme Court declined petitions from both Apple and Epic contesting aspects of the ruling after the Ninth Circuit largely affirmed the decision.
Judge Gonzalez Rodgher later found that Apple violated her order barring the antisteering rules by imposing new fees and restrictions she said were intended to preserve the company's "anticompetitive revenue stream." Apple sought to impose a 27% commission on purchases made through a link, rather than the 30% it charges for most in-app purchases.
The appeals panel found that the trial judge didn't clearly err in finding that Apple's antitrust compliance efforts had been in bad faith and didn't abuse her discretion in holding Apple in contempt for willfully violating her earlier 2023 injunction.
The panel agreed with Apple, however, that a "zero-commissions rule" went too far by barring Apple from collecting a "nonprohibitive, reasonable commission or fee to ensure security and privacy for users."
Epic reached a settlement in its case against Google last year, after the Ninth Circuit affirmed a California jury's 2023 finding that Google monopolized the Android app distribution market and the market for in-app billing services on Android devices.
U.S. District Judge James Donato issued a three-year injunction requiring Google to open the Android operating system to Play Store rivals. The judge is now expressing serious doubts about the settlement and proposed changes to the court's order.
A representative for Epic declined to comment Tuesday. Representatives for Apple did not immediately respond to a request for comment.
U.S. Circuit Judges Sidney R. Thomas and Milan D. Smith Jr. and U.S. District Judge Michael J. McShane sat on the panel for the Ninth Circuit.
Epic Games is represented by Gary A. Bornstein, Yonatan Even, Lauren A. Moskowitz, Michael J. Zaken and M. Brent Byars of Cravath Swaine & Moore LLP and Paul J. Riehle of Faegre Drinker Biddle & Reath LLP.
Apple is represented by Gregory G. Garre, Roman Martinez, Soren J. Schmidt, Ben Harris and Kristin C. Holladay, Sarah M. Ray and Nicholas Rosellini of Latham & Watkins LLP and Mark A. Perry, Zachary D. Tripp, Joshua M. Wesneski, Cynthia E. Richman, Theodore J. Boutrous Jr. and Daniel G. Swanson of Gibson Dunn & Crutcher LLP.
The case is Epic Games Inc. v. Apple Inc., case number 25-2935, in the U.S. Court of Appeals for the Ninth Circuit.
Deal Summary
