What is happening in Epic Games vs Apple? Part two

The dispute between Epic Games and Apple continues to generate discussion in the video games industry. As LegalPlay, we have already described the origins of the dispute and the lawsuit filed by Epic Games in an earlier post. As promised, we are following the latest reports on the matter. We invite you to read the summary and analysis of the latest reports in the dispute, which have appeared since the previous post.

Unreal Engine on iOS is safe, Fortnite still out of AppStore

As we have mentioned in the previous post, in response to Epic Games’ actions, Apple planned to block Epic’s access to Apple’s developer tools, which would prevent further development of Unreal Engine on iOS and macOS. In reaction to Apple’s announcement, Epic has applied for a temporary restraining order prohibiting Apple from blocking access to developer tools and restoring Fortnite to the App Store.

On August 24th, Judge Yvonne Gonzalez Rogers agreed to the first of two Epic’s motions. The judge prohibited Apple from taking any adverse action blocking Epic Games’ access to Apple’s development program because of the placement of an alternative payment method in Fortnite. As to the motion to restore Fortnite to the App Store, the judge decided not to impose such an order on the Cupertino company.

The judge made the order effective until a decision is made on the preliminary injunction (which is, in simple terms, more “permanent” than a temporary restraining order). A hearing on this subject was held on September 28th – for more information see below.

Google asks for not merging cases regarding Google Play and App Store

In early September, Google reacted to the lawsuits. On September 3, lawyers representing the company from Mountain View filed a motion to the California court not to combine the Epic Games lawsuits against Apple and Google in one proceeding. Google has invoked several convincing arguments in its submission.

Firstly, Google pointed out that other antitrust cases that are already ongoing against Apple and Google are at completely different stages. Secondly, the proceedings against Google also include non-US subsidiaries of Google. Finally, Google argued that the cases differ in substance, as Google and Apple apply a different business model.

The cases have not been joined, therefore Google managed to convince the court. Clearly, such a turn of events works in favor of the company. First of all, this will probably give Google more time to prepare its arguments in its own trial. Regardless of the outcome of the case against Apple, the Internet giant will be able to build its argumentation by pointing out the differences in the terms of service of Android and Google Play Store compared to iOS and App Store.

20-09-03 Google Opposing Co… by Florian Mueller

Fight fire with fire – Apple reacts with a countersuit

On September 8th Apple filed a response to the Epic Games lawsuit in court. In its reply, Apple not only referred to the arguments of Fortnite’s creators, but also decided to file counterclaims.

In its submission, Apple stated that Epic only pretends to be Robin Hood, while the case is “nothing more than a basic disagreement over money”. The company noted the value  presence on Apple’s platform for Epic Games, which the developer is now unwilling to pay for. Placing an alternative payment method without Apple’s consent was, in the company’s opinion, not only a breach of the agreement that Epic entered into with Apple, but also damaged the company behind devices bearing the symbol of a bitten apple. Apple argues that Epic Games itself knowingly first attempted to obtain preferential terms and then intentionally brought the damages upon itself, which it is now challenging in court. Interestingly, Apple refers in the motion to Epic Games’ relationship with Tencent (the Chinese giant owns 40% of the company), suggesting that it is the Chinese company that is behind the whole affair.

Apple’s reply is available here.

Coalition for App Fairness

Before the hearing set for September 28th, Epic Games, alongside 13 other companies including Spotify, deezer and Basecamp, announced the creation of the Coalition for App Fairness, an organization directly targeting Apple’s practices, which are the subject of Unreal Engine developers’ lawsuit.

Issues raised by the organization include anti-competitive practices contained in Apple services regulations, the 30% “Apple tax” on almost all iOS transactions and the lack of consumer choice. Microsoft recently responded to the organization’s calls by publishing 10 new app store principles on the Microsoft Store, which reflect those proposed by the Coalition for App Fairness.

Back to the court dispute: trial date set and preliminary injunction issued

On September 28th, the court hearing mentioned above took place. Both parties had a chance to present their arguments in the dispute before Judge Rogers and answer her questions. During the hearing (which could be watched on Zoom), the judge did not make a decision on the preliminary injunction, but on the basis of her remarks, conclusions can be drawn as to her current perspective on the case.

Epic pointed out that when deciding to enter into a dispute with the world’s largest company, he was aware that the fight would be difficult and Apple might want to “take revenge” on the company, so his in-court and out-of-court actions were planned and calculated. Fortnite’s creators argued that the distribution and payment system on iOS can be as open as on computers with macOS.

The judge observed that other parties are also accusing Apple of unfair conduct and this may affect the outcome of the dispute. The judge agreed with Apple’s argument that Epic had brought damages on itself in the dispute. She also pointed out that 30% of platform commissions seem to be a standard in the video games industry, and closed ecosystems such as iOS have existed for decades. On the other hand, the judge agreed with Epic regarding the argument that by adding an alternative payment system, Fortnite’s developers have been able to prove that an In-App Payment system is a separate service.

The decision on the preliminary injunction was made on October 9th. The judge upheld her earlier decision. Apple was ordered not to suspend Epic Games access to the Apple Developer Program because of Fortnite-related activities. However, the game will remain outside of the App Store, as the judge did not impose an obligation on Apple to bring it back.

Judge Yvonne Gonzalez Rogers also announced a schedule of further proceedings in the case. The trial date is set for May 3, 2021. Before the trial there would be a discovery phase, so the parties were given time to collect and present evidence in the case.

In the meantime, parties are still exchanging their replies and argumentation, which they are using to persuade the court. For example, Apple in its most recent response points out that even though Fortnite was removed from App Store, gamers are still able to avoid the Apple commission for in-game purchases. Everyone who installed the game from App Store before it was taken down (and did not uninstall it) can still play it, which includes buying DLCs using payments directly to the Epic Games.

US Congress published the outcome of its investigation against Big Tech

In the meantime, the US Congress has published a report concluding the investigation against Google, Amazon, Facebook and Apple concerning potential monopolistic practices.

The report directly refers to the Epic Games dispute with Apple and Google. The Committee on the Judiciary of the House of Representatives states that both companies are using their dominant position to impose high charges on mobile game developers and are blocking alternative payment systems.

It is also worth noting the comments of former Apple App Store director, Phil Shoemaker, included in the report. Shoemaker believes that the amount of commission charged by Apple does not have much to do with the costs incurred, and that the Apple Arcade service, present on the App Store, violates the same Apple’s guidelines, which Cupertino company refers to when blocking access to services such as Microsoft xCloud and Google Stadia. Apple Arcade (as well as Google and Microsoft services) provides access to a wide range of games in exchange for a monthly subscription.

The Commission also made recommendations. Among the Recommendations included, among others, the introduction of requirements prohibiting companies from forcing their own services, greater government control over the acquisition of other companies by Big Tech, the strengthening of antitrust regulations and broader control of the Congress over the activities of companies from the Silicon Valley. The recommendations are non-binding, but they indicate an increasingly strong change in the US authorities’ approach to operations of Big Tech, which includes Apple and Google.

Summary and analysis

In a nutshell, recent events can be summarized as follows: the dispute continues and is only just beginning to heat up, Fortnite remains outside the App Store and developers of games and applications using Unreal Engine on Apple devices can rest easy.

From the decisions and statements made by Judge Yvonne Gonzalez Rogers to date, it can be concluded that the judge is currently more inclined to rule in favor of Apple. It will be quite a challenge for Epic Games to convince the judge. However, it may turn out that the public discussion the case generates might be enough to make the changes that Epic argues for, if the discussion does not end.

In a broader context, it is worth to notice that regardless of the final outcome of the litigation (which may last for many years), dark clouds are gathering over Apple and other Silicon Valley giants. Both American and European authorities are beginning to see how much strength and impunity these companies have gathered and the need to regulate them.

The first consequences of the dispute on the situation in the industry can already be observed. In addition to the abovementioned rules introduced on Microsoft Store, Redmond company also announced a plan to revise the rules on the Xbox platform. Google, in turn, announced that it will make it easier to use alternative application stores (such as Epic Games Store) in the next version of Android. It seems that both corporations consider the forced change of the rules as feasible and decided to apply the first changes in order not to become the subject of further criticism.

The changes made in the direction proposed by Epic Games seem to be positive for the video game industry. The conclusions expressed in the previous post on LegalPlay remain applicable. Bigger competition in the mobile game distribution markets, including in-game payments, should result in more money flowing to the industry’s accounts (at the expense of platforms), enabling gamedev to grow even faster. It may also turn out that the changes will affect console markets as well, although in this case the situation is much more complicated, as console manufacturers often sell their devices at prices which are close to production costs, making their profits almost exclusively from selling console games.

One thing is certain: both sides are facing a long court battle. We will continue to follow and report on the latest developments in the case. To stay up to speed, we encourage you to visit our website regularly. If you have any question about the topic, feel free to ask us!

Main image: © Adobe Stock/Epic Games



Battle royale moves to the court – what is the feud between Epic Games, Apple and Google about?

Not long ago we have reported here on LegalPlay a Ubisoft’s lawsuit against Apple and Google regarding the Area F2 game, and the video games Industry has once again has entered into a dispute with Silicon Valley companies. Tech giants are under fire from another industry representative – Epic Games. This time, companies are accused of ‘their own’ actions, the dispute has led to the removal of the most popular game in the world from the marketplaces, and the situation is much more serious and could affect the whole gaming industry. The case concerns such fundamental issues as the business models adopted by developers of mobile iOS and Android systems. How did the dispute between Epic Games and Apple and Google arise? What accusations does the developer make against the tech giants?

The feud

Epic Games is a developer and publisher of games and gaming technologies. Currently, the largest products offered by the company are Fortnite and Unreal Engine. Fortnite is an extremely popular battle royale game, available on PCs, consoles and mobile devices, which has attracted a total number of over 350 million players. Recently, the game has also allowed the community to participate in concerts or film screenings. Unreal Engine, on the other hand, is an extremely popular video game engine, which has also recently started to be used by filmmakers (e.g. the creators of The Mandalorian). Epic Games has also challenged Steam through the Epic Games Store, a PC-based gaming store widely discussed due to the controversial practice of buying temporary exclusivity for the distribution of popular PC games, and sharing free games on a weekly basis.

Fortnite was until recently available on both of the most popular mobile platforms – iOS and Android. Apple does not allow for downloading apps (including games) from outside the App Store – a platform for distribution of apps on the Apple mobile system, so the only option for Fortnite’s presence on iPhones and iPads was to comply with the conditions imposed by Apple. Google’s platform is more liberal in this regard – you can use apps from outside the Google Play Store on Android, but you need to change your phone’s settings in order to be able to download apps from outside the Google’s store. Apps outside of Google Play are also not capable of automatic background updates. Epic Games initially encouraged players to download Fortnite directly from their website and then also made the game available on the Google’s marketplace.

Both Apple and Google charge 30% commission on all purchases made through the App Store and Google Play Store. In addition, both platforms require app publishers to use their own in-app purchasing systems, such as Fortnite’s cosmetic skins and in-game currency. In both cases, Apple and Google charge 30% commission on each in-app purchase.

Tim Sweeney, CEO of Epic Games, for any months has been accusing tech giants of using its monopolistic position to impose uncompetitive commission rates on developers and publishers and to block free access to the distribution of applications on its systems. The practices of Apple and Google have also attracted the interest of authorities on both sides of the Atlantic –  the US Congress and the European Commission are conducting investigations into the companies’ activities.

On August 13th, Epic Games updated Fortnite on the App Store and Google Play, allowing players to choose how to pay for in-game add-ons, between the current system (via Apple and Google payment systems) and direct payment via the Epic payment system. As you can see below, the second payment method meant 20% lower prices.

In response, on the same day, both Apple and Google removed the game from their stores for violation of the store guidelines prohibiting other payment methods within the application. In reaction to the technological activities of the giants, Epic Games decided to bring actions against both companies, demanding the removal of the restrictions, which in Epic’s view constitute an abuse of dominant position of the companies.  With regard to Apple, Epic Games also published a parody of Apple’s famous “1984” ad aimed at IBM, in which it calls on Fortnite players to oppose the actions of the corporation, under the hashtag #FreeFortnite.

Suit against Apple

In the lawsuit against the Cupertino corporation, Epic accuses the company of unfair and illegal monopolistic practices, blocking competition in two markets: distribution of applications on mobile devices (smartphones and tablets) with iOS system and processing of consumer payments inside applications on iOS.

As Epic Games repeatedly stresses in its lawsuit, although Apple’s actions have led to financial losses to Fortnite’s publisher and developer, Epic is not seeking damages, but “only” a court injunction to stop Apple from taking the actions described in the lawsuit and for the court to declare that the restrictions imposed by the company are illegal and ineffective.

More than a billion people in the world use iPhones, and there are currently over 1.5 billion iOS devices in use worldwide. Apple’s user base is also distinguished by the statistics that, on average, they spend twice as much money on apps as Android users. By pointing this out, Epic argues that the presence of mobile app developers on iOS is necessary – the omission of this platform by a developer means giving up the possibility of reaching more than a billion “generous” users.

App Store

App Store is the only way to distribute apps on iOS. According to Epic, Apple prevents competition on its system in several ways. Technologically, Apple blocks downloading apps outside of the App Store, pre-installs the App Store on every iOS device, and prevents removal. On the contractual side, in order to make the apps available on iOS, each developer must enter into an agreement with Apple (the so-called Apple Developer Agreement), the terms of which are not subject to change (is is the agreement of adhesion). The agreement dictates the App Store as the exclusive platform for general distribution of apps on iOS. The agreement prohibits developers from distributing applications that are a store or marketplace for other applications. Similar provisions are set out in Apple’s App Store Review Guidelines. Interestingly, the macOS operating system, which is available on PCs with a bitten apple in the logo, does not have these restrictions – applications can be installed from various sources. There are also third-party stores available on macOS, including Steam or Epic Games Store.

According to Epic, such restrictions lead to a lack of competition on iOS and harm three types of entities:

  • potential app distributors – other would-be marketplace, which could exist on iOS, introducing competition to the market;
  • iOS app developers – by taking away their choice of how they want to distribute their apps, by making them dependent on Apple’s unilateral decision regarding their presence on the platform, and by reducing their revenue by Apple charging 30% commission on each transaction on the App Store;
  • consumers – by limiting the choice of available apps only to apps available on the App Store (and therefore only to apps accepted by Apple) and by increasing the cost of apps due to the 30% “tax” that developers must take into account when pricing apps.

Apple In-App Payments

The second leg of Epic’s allegations against Apple is related to the payment system inside the application. As Fortnite’s creator points out, Apple has a monopoly (100% share) on the market for in-app payment processing in iOS. Apple has effectively maintained this state of affairs through anti-competitive practices. Each transaction made through Apple’s in-app payment system involves collecting 30% of the transaction value by the corporation. As Epic points out, the fees of other electronic payment operators amount to around 3% of the transaction value, ten times less than the fees charged by Apple. App Store Review Guidelines clearly indicate that it is prohibited to use other (non-Apple) payment systems within an application, and even to encourage consumers to make payments in other form outside the application. Breaking the rules means removing the app from the App Store. According to Epic Games, the desire to ensure the security of transactions is not an excuse to fully block competition, as other payment services in the market also compete with their level of security, and Apple allows certain apps to use non-Apple payment processing to pay for products and services such as food (e.g. Glovo), rides (e.g. Uber), or apartment rentals (e.g. Airbnb).

Epic believes that Apple’s actions again harm three groups of stakeholders: other potential in-app payment processors, application developers and consumers.

As Fortnite’s developer points out in the lawsuit, even if consumers were aware of Apple’s practices ( and usually they are not), switching from iOS to another mobile system involves high switching costs, which discourages consumers from switching and also enables Apple to engage in monopolistic practices. In addition to the most obvious financial costs associated with having to buy a new device, Epic also identifies costs linked to having to learn the new system and to overcome habits if a consumer decides to change the mobile system. Some iOS users have also invested heavily in apps purchased on the App Store, which further discourages them from switching to a new system because not all apps are available on other platforms (e.g. Android) or their developers do not provide the ability to switch to a version of an app on another platform at no cost.

All of the above arguments led Epic Games to conclude that Apple’s conduct described above violates the provisions of the US federal Sherman Act, which prohibits “monopoliz[ation of] any part of the trade or commerce among the several States, or with foreign nations” and entering into “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations”. In addition, Epic Games has accused Apple of violating the California Cartwright Act, which prohibits the the combination of resources by two or more persons to restrain trade or commerce or to prevent market competition. Under the Act, a “combination” is formed when the anti-competitive conduct of a single firm coerces other market participants to involuntarily adhere to the anti-competitive scheme. Finally, a game developer has also charged Apple with violating California Unfair Competition Law by violating the prohibition of any unlawful, unfair, or fraudulent business act or practice.

Suit against Google

The Epic Games lawsuit against Google is very similar to the lawsuit against Apple. Also in this case, Epic accuses the company of illegally monopolizing and imposing restrictions blocking competition in two markets: distribution of apps on Android mobile devices (smartphones and tablets) and processing consumer in-app payments on Android.

Again, despite the losses incurred, Epic does not claim damages from Google, but rather a court injunction requiring Google to cease the actions described in the lawsuit and to declare the restrictions imposed by the company as unlawful and ineffective.

Google Play Store

The Android system developed by Google is much more open than iOS, so the arguments of the game manufacturer and publisher are more nuanced. In a lawsuit against a corporation from Mountain View, Epic Games indicates that by creating numerous contractual and technical barriers, developers and users of Android applications are forced to use the Google Play Store.

Android is made available by Google to smartphone and tablet manufacturers (referred to as OEMs – original equipment manufacturers). As established by the European Commission, Android is installed on 95% of devices sold by OEMs using a licensed system and almost 75% of mobile devices with a pre-installed system. According to the statements of the motion, smartphone manufacturers (the claim refers to ZTE and Nokia) indicate that other licensed mobile systems are not a reasonable alternative to Android, which is due, among other things, to the lack of apps present on the most popular mobile system. OEMs must therefore use Android. Google is well aware of this and therefore imposes specific licensing conditions on OEMs when licensing Android. Among these terms and conditions, Epic mentions, for instance, the need to pre-install the Google Play Store and up to 30 other Google applications on the system and to place the Google Play Store shortcut on the main screen of the system (the first one displayed after unlocking the phone) by default. In addition, Google affects OEM agreements with other Android-based app distributors. As an example, Epic pointed to its own agreement with OnePlus, which was to enable easier direct installation of Epic Games on the manufacturer’s phones. Initially, the agreement was meant to cover the whole world, but due to Google’s intervention, which feared that the agreement would lead to a silent “bypassing the Google Play Store”, OnePlus and Epic were forced to limit the territorial scope of the agreement to India only.

As is the case with Apple, the non-negotiable Google Play Developer Distribution Agreement contains provisions that prohibit the distribution of competing app stores. In addition, Google conditions the ability to advertise apps available on Android through Google services (e.g. search engine, YouTube) on the presence of the app in the Google Play Store or App Store (in the case of iOS apps).

Epic also draws attention to the obstacles implemented in the Android system, which, according to the manufacturer, are designed to discourage consumers from installing applications outside the Google Play Store. Direct installation of applications outside the Google Play Store is much more complicated and involves changing system settings and manually granting permission for the app. The process of installing apps this way means that the consumer is faced with numerous warnings about the danger of the installation process.

From a technical point of view, applications installed outside the Google Play Store are not allowed to make updates “in the background” – you must manually install each update. In addition, to protect against malware, Google may flag any application as “malware”, which may result in the downloading and installation being blocked and forced uninstallation of the application. Epic in the lawsuit suggests that such a mechanism may be abused by Google.

In the opinion of Epic, the California Corporation’s conduct described above harms OEMs, competing application distributors, developers and consumers. As with Apple, the claims can be summarized as limiting choice and forcing others to use Google’s services while at the same time having to pay 30% of all expenses made through Google Play.

Google Play Billing

As in the case of Apple, Epic’s next claim against Google concerns the monopolisation of the in-app payment field of apps installed through the Google Play Store.

In respect of applications present in the Google Play Store, Google enforces the use of its own payment processing system inside the application – so-called Google Play Billing. Like Apple, Google charges 30% of any amount spent through Google Play Billing, which is about ten times the commissions charged by other electronic payment processing companies.

As Epic points out, at the turn of 2019 and 2020, the company tried to place Fortnite on the Google Play Store twice with an alternative payment processing option, but was refused by Google, which forced it to place a version implementing only Google Play Billing in the store. Notably, Epic reveals in the lawsuit that Google encourages video game developers and publishers to be present on the Google Play Store by offering them preferential terms and conditions for other Google services, such as YouTube and cloud services. Epic even explicitly indicates that, to its knowledge, Activision Blizzard has decided to enter into such an agreement.

As with forcing a presence on the Google Play Store, in Epic’s view Google’s conduct harms app developers, consumers and other electronic payment processors, effectively blocking competition, reducing choice and increasing transaction costs.

According to Epic Games, Android users, like iOS users, are burdened with high potential costs of changing the system, which at the same time allows Google to apply the described practices.

The charges brought against Google by Epic Games are identical to those brought against Apple. The video game developer alleges that the corporation has violated the Sherman Act, the Cartwright Act and unfair competition laws.

Summary and commentary

At first glance, the Epic Games dispute with Apple and Google looks like another corporate dispute with big money in the background. Of course, there is a considerable amount of money involved – it is calculated that by the time Fortnite was removed from iOS, players had spent as much as $1.2 billion on in-game purchases on Apple devices alone. 30% of that amount that went to Apple as commission is a colossal amount that acts on the imagination and is certainly able to get a company like Epic Games to fight to increase its revenues.

However, the dispute should be looked at more broadly – using suits, Epic Games questions the model of operation of the most popular mobile systems, based largely on control over the actions taken by developers and the high, 30% commission for payments made on the platform. At the same time, by refraining from claiming compensation, the company creates an image of a defender of the collective interests of the industry that does not care about its own profits.

Both Apple and Google defend themselves against accusations of restricting the freedom of developers on their platforms by pointing out that their procedures increase the security of using iOS and Android. Certainly, a rigorous evaluation process before publishing an app on the App Store has a positive impact on security, but some of the decisions made by corporations seem to be purely business-related. With respect to 30% commissions, Apple recently published an independent study it requested, according to which 30% is the standard commission rate in digital stores, including those for video games.

From the perspective of the video game industry, it seems more beneficial for Epic Games to win. Breaking the monopoly of the tech giants will reduce the commissions paid to intermediaries. As a result, more money will go into developers’ and publishers’ accounts, which will increase their revenue and allow for more money to be spent on new productions.

The battle is fought for the attention and wallets of mobile players – a large and growing group of consumers. Recent examples of not allowing the development of xCloud and Stadia services on iOS or blocking the inclusion of games in Facebook Gaming show that Apple wants to maintain full control over its mobile platform and rules of use, clearly restricting competition.

The battle is fought for the attention and wallets of mobile players – a large and constantly growing group of consumers. Recent examples of not allowing the development of xCloud and Stadia services on iOS or blocking the inclusion of games in Facebook Gaming app show that Apple wants to maintain full control over its mobile platform and rules of its use, clearly restricting competition.

Apple’s first reaction to Epic’s suit confirms this theory. In response to the lawsuit, Apple decided to block Epic Games access to accounts and development tools for iOS and macOS, effective from August 28th. Such a move would prevent Epic Games from further supporting and updating the Unreal Engine on Apple devices. It might antagonize a whole mobile gaming industry against Apple, as it does not only impact Epic, but all developers using Unreal Engine on iOS as well. In response to this move, Epic Games has requested a court to impose a temporary restraining order in the form of a suspension of the stoppage of access pending resolution of the litigation between the parties.

The central issue of the dispute would be the interpretation of the American anti-monopoly provisions. It is important to stress that having a monopoly is not illegal – it is illegal only to use this monopoly to hurt consumers and other businesses. Epic Games is faced with a great legal battle. The lawyers will have to persuade the court that the distribution markets on iOS and Android, as well as in-app payment markets in these systems are relevant markets to evaluate the monopolist status. Even bigger challenge might be to persuade the judge that setting the rules of using the platform you have created might be understood as actions restricting the competition. Epic might be met with a reaction that as platform owners, Apple and Google are free to set any rules they like in regard of using their services.

Regardless of the outcome of the court proceedings, more important might be the stimulation of a discussion on the practices applied by the creators of iOS and Android. By trying to „recruit” players in the fight against corporations, Epic Games wants to use the gaming community to influence their policies, which might be assessed negatively, but had proven effective in the past (e.g. in case of the return of Spider-Man to the Marvel Cinematic Universe). The company’s actions might also encourage politicians and officials to intensify their actions aimed at Apple and Google and impact their evaluation of the situation.

The feud between Epic Games and Apple and Google promises to be one of the most important trials in the history of the video games industry, with potential impact reaching far outside of the industry. We will monitor it closely.

The Epic Games’ lawsuit against Apple is available here, and the suit against Google is available here.

The article is the first in the series of articles summarising the dispute between Epic Games, Apple and Google.
The second part can be found here: What is happening in Epic Games vs Apple? Part two

Title image: © Adobe Stock/Epic Games

Ubisoft sues Apple and Google – another episode of clone wars

Recent days have brought us another interesting news in the video games industry. Media report that Ubisoft sued Google and Apple. The case concerns a mobile game called Area F2, made by Chinese developer Ejoy.com, which belongs to the Alibaba company. According to the lawsuit, the mobile game is a “carbon copy” of popular Tom Clancy’s Rainbow Six: Siege game, released on consoles and PC. Ubisoft’s statements are hard to deny – the similarity is striking. In this article I will present, which legal arguments could be used by Ubisoft against Chinese developer and why we see Apple and Google on the defendants side and not Ejoy.com and Alibaba.

Games cloning is a phenomenon which has existed almost as long as the video game industry itself. There are numerous cases of games being blatant copies or imitations of popular titles. First disputes regarding such games appeared as early as in the ‘70s and are related with the legendary game Pong. Nowadays, the problem of clones is particularly noticeable on the mobile games market. Lower costs of production, as well as easier and cheaper process of releasing games on Google Play or AppStore have caused these marketplaces to be flooded with games openly “inspired” by other popular titles.


Games cloning is an issue particularly complex to address from copyright’s point of view. The border between legal inspiration and illegal infringement is very fluid. Copyright does not give protection to ideas, methods or rules. Only specific, creative expression of an idea is protected. Therefore, copying the mechanics of one game in another does not infringe copyright as long as no protected elements of the game are copied, such as art, music, assets or source code.

Not every element of the game normally protected by copyright will be protected in a particular case. It may turn out that apart from the mechanics of the original game, the creators of the clone only copied elements typical for the genre, such as first-person view in the shooter or spellcasting in the fantasy game. These elements are not usually protected by copyright. In the US, such elements are known as scènes à faire, elements almost mandatory in a particular genre. In Poland, we would probably recognise such elements as not creative because of their prevalence in numerous works.

Other intellectual property rights

Other intellectual property rights may be more appropriate to protect a video game from cloning. Clone creators often use similar or even identical names and icons for their productions to lure the consumer to their game. One way to protect yourself against such practice may be to register the name of the game, its logo or icon, and even the names and images of game characters as trademarks. This may effectively discourage cloning or provide for an easier way to prove an infringement in a case when a clone is created. If the game mechanics are truly innovative, it is also worth to consider registering them as a patent (this is what Techland has done with the movement mechanics in Dying Light).

Unfair competition

In a situation when clone developers have not infringed upon copyright or any other intellectual property rights, there is one more legal weapon in clone wars – unfair competition law. Release of the clone may be considered as an act of unfair competition. Clones often try to mislead the consumer that the game comes from a developer which is particularly renowned on the market, either by misleading label on the platform or by passing off. Such behaviour is prohibited. The developers of the original game are entitled to claims for stopping the infringement, remedy, damages or a declaration of an infringement from the clone developers.

The liability of Apple and Google

Based on the rules of the liability of clones’ developers and publishers for infringing rights of game developers and publishers why then in the case of Area F2 Ubisoft sued Apple and Google, not Ejoy.com and Alibaba?

Apple and Google are Internet service providers, AppStore and Google Play respectively, which enable users to buy or download for free games (in this case, clones) directly from their platforms. According to reports, Ubisoft has sent notices to both companies, demanding the takedown of the game from their services. Tech giants did not react to the French publisher’s demands. According to the US Digital Millennium Copyright Act (analogous act in Europe is the so-called e-commerce directive), in case of no reaction to the notice regarding takedown of copyright-infringing materials (e-commerce directive is not limited only to copyright infringements), Internet service providers are liable for the infringement like the direct infringer French publisher probably hopes for the lawsuit to force the giants to react to the emergence of such clones in the future.

Clone wars – a battlefield report

As I mentioned in the introduction, disputes regarding clones have been present in the US almost from the beginning of the video games history. At the beginning of the’80s there was a dispute regarding the cult arcade game– Asteroids. The company called Amusement World created, in the opinion of its author, Stephen Holniker, a superior copy of the game, called Meteors. Atari, the publisher of Asteroids, saw Meteors at the trade fair and decided to file a lawsuit against Amusement World for copyright infringement. To a surprise of many, Atari suffered a defeat. Thanks to this case we got a precedent ruling that the idea for a video game is not protected and as long as there is no copying of particular protectable elements of the game, there is no infringement. The decision in this case opened the doors for the creation and publishing of copies of famous video games. For decades, courts have not really departed from the argumentation presented in this judgement.

Asteroids (left) and Meteors

Chances for a change have appeared at the turn of the first and second decade of the 21st century. The case that expressed a different approach to games cloning concerned a different legend – Tetris. In 2009 a company called Xio published a Tetris clone – a game called Mino. Xio’s production was indistinguishable at first sight from Tetris, even though all its elements which were protected with copyright– art and sounds – have been substituted. Deviating from the accepted practice, the court decided to make an overall assessment of the “impression” that a clone makes on its recipients. Following the court’s line of reasoning, it is therefore not enough to make minor changes to the original to avoid liability for video game’s copyright infringement.

Tetris vs Mino (source)

Similar conclusions can be drawn by looking at Spry Fox v. 6Waves case. The dispute concerned a game called Yeti Town, which copied the game mechanics of a title called Triple Town, however significantly changed the art and setting of the game. Although the case has ultimately ended with a settlement, the court’s decision which allowed for the trial suggested a similar approach as in the case of Mino game. The court has drew his attention not only to the protected elements of the game, but also to the game mechanics and the impression of the recipients, supported by bloggers’ opinion who have pointed out the striking similarity between both titles. The decision of the court has been also influenced by the name of the disputed game and the fact, that the publisher of Yeti Town was initially supposed to publish Triple Town at social media platforms, but the negotiations between the parties have failed.

Triple Town vs Yeti Town (source)


Games cloning is a morally wrong, but incredibly lucrative business and unfortunately it does not seem like it could end soon. Clone developers save time on the process of designing games, which allows them to make quick money. Clones may sometimes even be used as a tool for defrauding personal information or offences against minors, which has been shown by recent example of Club Penguin clones. Apple and Google, as the “gatekeepers’ of their ecosystems do not want to create an image that it is hard for developers to access their platforms, which could discourage devs to create games for their platforms.

It is hard to tell what would be the final result achieved by Ubisoft in a case which has become an inspiration for publishing this article. Proving a copyright infringement, which is required for tech giants’ liability might be very hard. For sure, the publisher counts on a similar outcome as in the Triple Town case. As in the case of this simple game, the cloning is evident, and the opinions of Internet users are unequivocal. No matter the end result, Ubisoft has managed to score a first win – Ejoy.com decided to delist the Area F2 from App Store i Google Play to „carry out improvements in order to deliver a better experience to players”. It is very likely that this result will satisfy the publisher and the suit will be withdrawn, and the controversial game will come back online thoroughly changed.

Not everyone is “lucky” to be as big and as respectable as Ubisoft. It is therefore worthwhile to discourage others from cloning our game in advance, for example by securing rights to some of its elements. Regardless of the legal measures, it is also important to be aware of the danger and prepare for possible cloning of our title, for example by planning the game’s release cycle in such a way that the original game will appear on key markets first.

European Games BizDev Gathering or how to do business development in time of pandemic

It is obvious to say that the current coronavirus pandemic affects us all. However, in a case of video games industry, the impact of the virus is not only negative. As it turns out, in a time when millions are forced to stay at home, the interest in games has greatly increased. It influenced the growth of sales of games and consoles that can be best observed by looking at the debut of the newest instalment in Animal Crossing series on Nintendo Switch.

As every other industry, gamedev also faces problems now. The industry is affected by issues such as delays in hardware production or a sudden necessity for everyone to adjust to working from home, which in some cases may lead to postponing the release dates of long-awaited titles. Bigger and smaller gamedev studios were also affected by cancelled trade shows and conferences, which not only forced publishers to change their marketing plans but most importantly, made harder for developers to meet their potential publishers and investors.

European Games Developer Federation (EGDF) decided to respond to the last of these problems. For this purpose EGDF, along with rcp and Reboot, is organising the European Games BizDev Gathering – two-day online event enabling game creators to meet with publishers and investors, make new acquaintances in the industry and to showcase their ideas for games. In current circumstances, it seems like the best way to show your project and to get financial support for its production.

The event is open for every developer from Europe and for publishers and investors from all over the world. Organisers boast that over 300 entities have already declared their participation, including biggest players on the markets, such as for example Ubisoft, Wargaming or Paradox Interactive. There are also Polish publishers among the participants, such as 11 bit studios, HUUUGE Games or All in! Games.

European Games BizDev Gathering takes place from 13th  to 14th May 2020.
The participance in the event costs 35 EUR.
More details and the registration can be found on the event’s website:

We encourage you to participate! There’s still some time left to prepare the ideal pitch. Who knows, maybe during the event you will manage to meet your future publisher or investor? If yes, then we encourage you to contact us – we will help you to negotiate the terms of and formalize your relation.

Can LeBron James’ tattoos be replicated in sports video games?

From the video games industry perspective, the coronavirus lockdown does not seem to impact the operation of US courts. In last weeks, we got a few important decisions. One of them, described here on LegalPlay in the previous post, concerned the use of Humvees in Call of Duty games (and, more broadly, the use of trademarks in video games). Today, we would like to focus on the other one. It concerns the second best selling video game title in the US – NBA 2K series – and another American icon – LeBron James.

Tattoos could be considered a source of potential legal issues. As a work, they are usually protected by copyright. In general, the copyrights to the tattoo belong to the tattoo artist. As a result, the artist has a right (for example) to decide how the tattoo is disseminated or whether the person on which the tattoo is inked can remove or modify it. As the tattoos are placed on human body, it could lead to a conflict between copyright, publicity rights and a right to make decisions regarding one’s own body. The problem is not new – in the United States, there were cases involving the famous Mike Tyson’s face tattoo presented in The Hangover Part II or Carlos Condit’s tattoo presented in UFC Undisputed 3 video game. However, all past cases were settled – no final decision was made by the court. This time, the court had a chance to speak, and its decision would certainly make the gaming industry happy.

NBA 2K is the best-selling video game series which aspires to simulate the feeling of a professional NBA basketball game. 2K Games (and Take-Two, its owner), the publisher of the video games series, was sued by the company called Solid Oak Sketches. Solid Oak Sketches has acquired from their authors exclusive licenses to copyrights of five tattoos of three different basketball players – LeBron James, Eric Bledsoe and Kenyon Martin. Solid Oak claimed that 2K has infringed upon its copyrights when it included these five tattoos in their games without a license from Solid Oak.

In its defense, 2K has claimed that it was actually legal for 2K to include players’ tattoos in their games and it had three different legal bases to do so. Firstly, it argued that the use of the tattoos was de minimis and therefore not infringing. Secondly, it claimed that it had acquired implied licenses from the players to present their tattoos in the games. Finally, it held that 2K’s use of the tattoos was fair use under US copyright law.

Judge Swain has agreed with the publisher on all three arguments and included a great explanation of every one of them. To understand the decision, it is best to analyse these findings separately.

De Minimis Use

For a US court to find a copyright infringement, two matters must be demonstrated: that the defendant actually copied the plaintiff’s work and that the copying is illegal because there is a substantial similarity between the defendant’s work and the protectible elements of the plaintiff’s work. The first part is indisputable here – the tattoos were in fact copied in NBA 2K video games. However, the second part is more problematic for Solid Oak. To be substantially similar, the copying must be more than de minimis.

For the copying to be de minimis, the copying of the copyrighted material must be trivial. In the analysis of this issue, the court took into account the following circumstances: the amount of the copyrighted work that is copied, the observability of the copyrighted work and factors such as “focus, lightning, camera angles, and prominence”. To reach a decision in this, Judge Swain also employed an ordinary observer test.

Application of all these rules led the court to hold that the use of tattoos was de minimis. No reasonable lay person would say that the tattoos in games were substantially similar to those licensed to Solid Oak. The tattoos appear only on three players out of over 400 available in the games. The tattoos in games are very small – they are 4.4% to 10.96% of their real-life size. When they appear, their display is small and indistinct, because they appear in the environment of a dynamic basketball game. All these factors considered, the use of tattoos was de minimis.

Implied license

2K held that it had an implied license to feature the tattoos as part of the players’ likenesses. The tattooists who made the tattoos admitted that they knew when they were inking them on players’ bodies that players were likely to appear in public or in media presenting their works. Therefore, the artists gave non-exclusive licenses to the players to use the tattoos as part of their likenesses. Players have then granted NBA the right to license their likeness to third parties. NBA granted such license to the creators of NBA 2K. Additionally, the players also gave direct permission to 2K to use their likenesses in the games.

Because all these actions were taken before Solid Oak was granted the copyrights to tattoos, the court concluded that 2K Games were granted an implied license to use tattoos in the games.

Fair use

Determination whether the use of the copyrighted work is fair use and therefore not infringement, requires consideration of four factors: the purpose and character of the use, the nature of the copyrighted work, the amount and the substantiality of the portion used in relation to the copyrighted work as a whole and the effect of the use upon the potential market for or value of the copyrighted work.

Judge Swain held that the use of tattoos in the game was transformative – they were used for a purpose of recognizability of players in the game, which is a different purpose than that for which they were originally created. Once again, it has been pointed out that in-game tattoos are much smaller and harder to recognise as they appear only as glimpses on the screen. 2K has even provided the data that five disputed tattoos “comprise only 0.000286% to 0.000431% of the total game data”. Even if the use of the tattoos in the game was commercial, consumers do not buy the game because it includes players’ tattoos.

As to the nature of the copyrighted work, the court held that tattoo designs are in fact more factual that expressive, because each of them is based on some other factual work or includes motifs frequently used in tattoos, like flames. Such consideration makes it more likely for the fair use to be found. The court also held that in this case, the copying of entire works was necessary for the purpose of fair use – to make the game more realistic, so this factor does not weigh against the developers. Lastly, the court held that the transformative use of the tattoos in video games does not harm the market for “real” tattoos. There is also no market for licensing tattoos for the use in video games because no developers enters into this kind of agreements. All four factors weigh in 2K Games favor, therefore the court concluded that there was fair use in the disputed case.

2K Games scored a big win in this legal match. The judge has decisively held that the developers have legal right to show copyrighted tattoos if they acquired the license to feature players’ likenesses. This decision would certainly discourage other entities like Solid Oak Sketches, which planned to make money out of licensing tattoos for use in games or other media. The freedom of artistic expression has once again been protected. It is also a good sign that the video games industry is determined to fight for their rights in courts, therefore enriching the case law and helping other developers in similar situations. Unfortunately, district court decisions do not create binding precedents, so it is still safer for a tattooed person to get a written release from the tattooist than worry later.

In Poland, the copyright protection awarded to tattoos is similar. The dispute regarding Mike Tyson’s face tattoo, mentioned in the introduction, could have appeared in Poland as well, because famous Polish energy drink manufacturer has put the boxer’s likeness on drinks’ cans. The author of the tattoos could potentially impact the use of the tattoo. The person on which the tattoo is inked should keep in mind that in Poland, the tattoo artist also has moral copyrights, which give him even more ways to influence the use of a tattoo. On the other hand, one could argue (as it was argued in the case) that the tattoo artist is usually aware that the tattoo may be shown on person’s body in different situations and therefore gives the person an implied license to use it as part of its’ likeness.

This court decision is not final as it could still be appealed by Solid Oak Sketches, however according to Solid Oak’s attorney, it seems unlikely.

The decision can be read in full here.

Can Activision use Humvees in Call of Duty? An important decision for video games industry

The video games industry has had a troublesome relationship with the arms industry for quite some time. Companies like Electronic Arts or Activision Blizzard used to get into license agreements with gun manufacturers and include special thanks to them in game credits, which sparked controversies connected with the American debate on gun violence. At least from 2013, EA stopped entering into licenses with gun manufacturers, however it emphasised that it still has a right and intention to use them. Around the same time, EA has settled its case with the makers of Bell Helicopters regarding the use of the their machines in the Battlefield 3, where it held that the US Constitution’s First Amendment gives it a right to depict these machines in the game without obtaining licenses.

Last week (on March 31st), United States District Court for the Southern District of New York has issued a decision which confirms the view held by EA, however in a case involving another big publisher – Activision Blizzard. Almost three years ago, Activision has been sued by AM General, the manufacturer of the iconic military vehicle – the Humvee. AM General has asserted that Activision has used the Humvee without its permission in several Call of Duty titles, which meant it infringed upon AM General’s intellectual property rights. As it now turns out, it did not.

In short, the court has decided that because the use of the Humvee in the Call of Duty franchise has an artistic purpose, the First Amendment’s freedom of speech prevails over the trademark rights granted to the Humvee manufacturer. It has also compared the use of trademarked goods in video games to such use in other works of art, such as movies.

In its analysis, the court has applied the two-pronged standard test introduced in the Rogers v. Grimaldi case for the use of trademarks in works of art. Under the first prong of the Rogers test, court had to decide whether the use of the trademark has any „artistic relevance to the underlying work whatsoever”. The court said that it does, as Call of Duty games aim to provide players with a sense of realism, and featuring real-life military vehicle certainly helps that.

Under the second prong of Rogers test, the court had to analyse whether the use „explicitly misleads as to the source of the content of the work”. To decide this issue, the judge applied another standard test – eight-factor Polaroid test. Once again, the court sided with Activision stating that the use of Humvees in the games is not explicitly misleading. Although the strength of Humvee mark weighed in plaintiff’s favor, Activision prevailed regarding all other seven factors. AM General failed to prove that the consumers may confuse its’ products with Activision products. The judge has also pointed out that Call of Duty is not a product which competes with AM General’s products. Activision’s clients are consumers, whereas Humvees are addressed and sold mainly to armies.

According to a survey conducted by AM General, only 16% of consumers were confused as to the AM General’s association with Call of Duty. As the judge stated in the decision, “less than 20 percent confusion regarding two companies’ ‘association’… is at most some confusion”, not compelling enough to say there has been an infringement. Judge has also invoked the case regarding the use of a knockoff Louis Vuitton bag in the Hangover II movie, where it has been said that “moviegoers are sophisticated enough to know that the mere presence of a brand name in a film, especially one that is briefly and intermittently shown, does not indicate the brand sponsored the movie”. As the judge said, „there is no reason to believe that video game players are any less astute”.

As a result, the decision stated that the use of Humvees was legitimate. It was artistic in nature, because it enhanced the games’ realism, and the „realism can have artistic merit in itself”. There is also no substantial confusion as to the source the marks depicted in Call of Duty games. In a case of moderate risk of confusion, the First Amendment rights prevail.

Although it does not create any precedent, the US District Court decision is a great win for the video games industry. It is an important example of how to apply the Rogers test and how video games in the United States earn the same status as works of art as books, games or movies, in case of which you do not need to ask for a permission if you want to briefly show the trademarked product. The decision also shows that the First Amendment once again proves to be a very powerful tool in protecting the artistic expression in the USA. It is interesting to briefly consider how the case would be decided in Poland – it could be argued that such short incidental display of a trademark does not use the mark in its trademark functions. In Poland, however, the case law on the protection of artistic expression is not as widely developed as in the US.

The situation regarding this case could develop, as the decision could be appealed by AM General. The full text of the decision can be found here.