Contempt Order Against Apple Largely Stands in Epic Dispute

Friday, December 12, 2025

Page 1

Court of Appeal:

Contempt Order Against Apple Largely Stands in Epic Dispute

Opinion Says Judge Rightly Found Tech Giant Violated Order Banning Prohibition on App Developers’ Ability to Link to External Purchases Through New Fee Scheme, Rejects Idea That Injunction Is Invalidated by Recent C.A. Opinion

By Kimber Cooley, associate editor

A District Court judge largely acted within her discretion in imposing civil contempt sanctions against Apple Inc. for flouting an injunction against the Cupertino-based company engaging in certain App Store business practices that were found to be violative of a California consumer protection statute, the Ninth U.S. Circuit Court of Appeals held yesterday.

In an opinion authored by Circuit Judge Milan D. Smith Jr., and joined in by Senior Circuit Judge Sidney R. Thomas as well as Chief District Judge Michael J. McShane of the District of Oregon, sitting by designation, the court rejected Apple’s call to vacate the underlying injunction based on last year’s decision by the Sixth District Court of Appeal in Beverage v. Apple Inc.

The questions arose in litigation initiated in 2002 by Epic Games Inc., maker of the wildly popular video game, “Fortnite,” accusing Apple of unfairly banning developers from using “buttons, external links, or other calls to action [to] direct customers to purchasing mechanisms other than” in-app purchases (‘IAPs’), on which the defendant charges a 30% fee for any games distributed through the App Store.

Saying that the judge was entitled to rely on the “spirit of the injunction,” the court found no error in the determination that Apple had violated the earlier order by imposing the new 27% commission on external purchases as of the effective date of the injunction and by restricting the design features developers could use to entice customers to make purchases directly through them rather than by way of an IAP.

However, the court concluded that the judge went too far by declaring in the contempt order that Apple was barred from charging any commission on external purchases, saying that the original injunction only barred actions that had a “prohibitive effect” on the developers’ ability to lure customers.

Apple Enjoined

Following a bench trial, District Court Judge Yvonne Gonzalez Rogers of the Northern District of California ruled in favor of Apple as to the plaintiffs’ federal antitrust claims but found that the company had violated state Unfair Competition Law (“UCL”) by banning developers’ ability to direct customers to non-IAP purchasing mechanisms.

In September 2021, she issued an injunction “permanently…enjoin[ing]” Apple “from prohibiting developers from…including in their apps and…buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to [IAP].” The injunction was affirmed by the Ninth Circuit in May 2023.

On Jan. 16, 2024, the same day that the injunction went into effect due to the U.S. Supreme Court declining certiorari, Apple implemented new plan that would, among other things, charge a 27% fee on any purchases made by following a link in the app to an external website.

Documents showed that the technology company had determined that “developers [would] reach a tipping point where they [would] lose more on linking out than they would make sticking with Apple [I]AP” because some users would be disinclined to leave the game to make a purchase.

Crying foul, Epic moved to enforce the injunction. On April 30, 2024, Rogers held Apple in civil contempt for noncompliance with the earlier decree, saying:

“This is an injunction, not a negotiation. There are no do-overs once a party willfully disregards a court order. Time is of the essence. The Court will not tolerate further delays. As previously ordered, Apple will not impede competition. The Court enjoins Apple from implementing its new anticompetitive acts to avoid compliance with the Injunction. Effective immediately Apple will no longer impede developers’ ability to communicate with users nor will they levy or impose a new commission on off-app purchases.”

Beverage v. Apple Decision

In the Beverage v. Apple Inc. case, the plaintiffs filed a putative class action complaint asserting claims against Apple based on alleged violations of the UCL, and other causes of action, relating to the company’s treatment of Epic Games and others.

The court declared that the UCL claims were barred as a matter of law because the trial court earlier ruled that the defendant’s policies were not violations of antitrust laws under the so-called Colgate doctrine, which greenlights unilateral demands that distributors adhere to the company’s pricing.

Agreeing with jurisprudence finding that a determination that the conduct is not an unreasonable restraint of trade necessarily implies that the conduct is not “unfair” to consumers, the court affirmed the trial court’s sustaining of a demurrer to the plaintiffs’ UCL cause of action.

Smith acknowledged the decision but said:

“There is no conflict between the judgment here and Beverage. In Beverage, the California Court of Appeal explained that its ‘decision [wa]s a narrow one.’…That decision ‘is limited to situations…where the same conduct found immune from antitrust liability by the Colgate doctrine is also alleged to violate the…UCL.’…Here, Apple has violated the ‘unfair’ prong of the UCL, but Apple has not identified when its conduct was found immune from antitrust liability pursuant to the Colgate doctrine. In contrast,…Epic’s antitrust claims [were found to have] ‘suffer[ed] from a proof deficiency, rather than a categorical legal bar’….”

Meaning of Prohibit

Noting that the injunction deals in terms of a bar on Apple from “prohibiting” developers from including external links to purchasing mechanisms other than the App Store, Smith said:

“The first question is whether charging a 27% commission has a prohibitive effect, in violation of the Injunction. We agree with the district court that it does.”

The jurist continued:

“Apple is not the first litigant to try burdening what it could not prohibit. Two hundred years ago, Congress created the Bank of the United States, and the state of Maryland tried to tax it….The Supreme Court saw through this ploy: Maryland could not tax the bank because ‘the power to tax involves the power to destroy[.]’…In the same way, Apple has demonstrated that charging commissions on linked-out purchases gives it the power to prohibit them.”

However, he opined that the “commission prohibition goes too far by denying Apple any way to purge its contempt by, for example, imposing a non-prohibitive, reasonable commission or fee to ensure security and privacy for users” and remarked that “[w]e reverse and remand this portion of the April 30 Order.”

He added:

“We recommend some possible courses of action to the district court regarding an appropriate commission or fee limitation on remand….Apple should be able to charge a commission on linked-out purchases based on the costs that are genuinely and reasonably necessary for its coordination of external links for linked-out purchases, but no more….In making a determination of Apple’s necessary costs, Apple is entitled to some compensation for the use of its intellectual property….”

Smith said the injunction does not run afoul of this year’s high court decision in Trump v. CASA, which indicated that nationwide injunctive relief is disfavored, reasoning that the order is not of the type frowned upon by the U.S. Supreme Court.

The case is Epic Games Inc. v. Apple, 25-2935.