Epic Games, Inc v Google LLC

Introduction 1 By an interlocutory application dated 7 April 2021 the two Applicants (together, 'Epic') seek leave to serve their originating application, genuine steps statement and concise statement on the First Respondent, Google LLC, in accordance with Art 10(a) of the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. Opened for signature 15 November 1965. 658 UNTS 163 (entered into force 10 February 1969) ('the Hague Convention'). Epic also seeks leave to serve the same documents on the Second Respondent, Google Asia Pacific Pte. Ltd. ('Google Asia'), in accordance with O 65, r 2A and r 3 of the Rules of Court (Singapore) and s 387 of the Companies Act 1967/2006 (Singapore), by serving them on Google Asia at its registered office in the Republic of Singapore. The Third Respondent, Google Payment Australia Pty Ltd ('Google Australia'), is an Australian company and has already been served under local service rules. In both cases, Epic also seeks to serve any orders the Court makes and any reasons for judgment which it gives on the interlocutory application.

Google LLC 2 Epic seeks to serve Google LLC under the Hague Convention and therefore applies under r 10.43(2) of the Federal Court Rules 2011 (Cth) ('FCR'). It must therefore establish the three matters in FCR r 10.43(4).

FCR r 10.43(4)(a) 3 Epic alleges that the Respondents ('Google') have imposed a series of contractual and technical barriers that render any method for distributing apps to devices that use the Android operating system, other than through the Google Play Store commercially and practically unviable. Epic says that this means that Google reserves for itself a near-monopoly position in the worldwide market for the distribution of apps to Android devices (excluding China). It labels this market the 'Android App Distribution Market'. A worldwide market may be sufficient at least for pleading purposes to constitute a market in Australia (Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd [2010] FCAFC 96; 188 FCR 351 at [44]-[45] per Jessup J) although this may depend on supply-side substitutability. Regardless of those niceties, Epic alleges that there is a distinct sub-market of the Android App Distribution Market in Australia, which certainly would constitute a market in Australia. 4 Epic also alleges that Google requires that developers who offer their apps through the Google Play Store ensure that any purchases of in-app content are carried out only with Google Play Billing. Epic alleges that there is an 'Android In-App Payment Processing Market'. This market is alleged to be a worldwide market or alternatively to have a distinct sub-market in Australia. 5 Epic alleges that these arrangements by Google constitute a misuse of market power within the meaning of s 46 of the Competition and Consumer Act 2010 (Cth) ('the CCA'), involve exclusive dealing contrary to s 47 and are contracts, arrangements or understandings that have the purpose, effect or likely effect of substantially lessening competition in the Android App Distribution Market and the Android In-App Payment Processing Market contrary to s 45. 6 Epic also alleges that Google has contravened s 21 of the Australian Consumer Law, being Sch 2 to the CCA, which proscribes unconscionable conduct. In a nutshell this contention is that Google has unconscionably used its bargaining position to extract Epic's agreement to the two sets of restrictions which underpin its competition case. 7 This Court has jurisdiction to entertain the competition suit pursuant to s 86(1) of the CCA and the claim under ACL s 21 pursuant to s 138 of the CCA. Since the Court has jurisdiction, the requirement of FCR r 10.43(4)(a) is satisfied.

FCR r 10.43(4)(b) 8 This requirement will be satisfied if the proceeding is of a kind mentioned in FCR r 10.42. The proceeding meets the description of a number of the items set out in the table in FCR r 10.42 including that in item 15: 'A proceeding seeking any relief or remedy under an Act, including the Judiciary Act 1903'. In their originating application Epic seeks declaratory relief under s 21 of the Federal Court of Australia Act 1976 (Cth) and injunctive relief under s 80 of the CCA and s 232 of the ACL.

FCR r 10.43(4)(c) 9 This requires Epic to demonstrate that it 'has a prima facie case for all or any of the relief claimed in the proceeding'. The evidence before the Court consisted of affidavits sworn or affirmed by: Alec Shobin, Senior Marketing Manager at Epic Games, Inc; Joan Lim-Casanova, a partner of Cavenagh Law LLP in Singapore; Katherine Forrest, a partner of Cravath, Swaine & Moore LLP in New York and Epic's attorney of record in proceedings commenced against Google LLC in the United States District Court for the Northern District of California; and Dave Poddar, a Sydney-based partner of Clifford Chance, Epic's Australian solicitors. Epic also relied on an affidavit and expert report provided by Paul Reynolds, an economist. A prima facie case is made out where, upon a broad examination rather than an intense scrutiny of the material before the Court, inferences are shown to be open which, if translated into findings of fact, would support the relief claimed: Australian Competition and Consumer Commission v April International Marketing Services Australia Pty Ltd (No 6) [2010] FCA 704; 270 ALR 504 at [8] per Bennett J. A detailed analysis of the evidence is not called for: NPP Australia Limited v Ripple Labs, Inc [2020] FCA 1237 at [27] per Burley J. This is particularly apposite where the party served has an entitlement to apply to set aside service under FCR r 13.01(1)(b). I am satisfied on the basis of the evidence before the Court that Epic has met the requirements of FCR r 10.43(4)(c).

Epic v Apple 10 Since all three of the stipulations in FCR r 10.43(4) are satisfied the power to grant leave is enlivened. How should the discretion be exercised? Clause 16.8 of the Google Play Developer Distribution Agreement between Epic and Google LLC and Google Asia ('the DDA') provides: All claims arising out of or relating to this Agreement or Your relationship with Google under this Agreement will be governed by the laws of the State of California, excluding California's conflict of laws provisions. You and Google further agree to submit to the exclusive jurisdiction of the federal or state courts located within the county of Santa Clara, California to resolve any legal matter arising from or relating to this Agreement or Your relationship with Google under this Agreement, except that You agree that Google will be allowed to apply for injunctive relief in any jurisdiction. If You are accepting the Agreement on behalf of a United States government entity, then the following applies instead of the foregoing: the parties agree to remain silent regarding governing law and venue. 11 It is possible that if Google LLC is served it will apply for a permanent stay of the proceedings on the basis of this clause. In Epic Games, Inc v Apple Inc (Stay Application) [2021] FCA 338 ('Epic v Apple'), I granted a temporary stay of a similar proceeding to give Epic the opportunity to bring its case in the Northern District of California. An appeal from my decision was heard by the Full Court on 9 June 2021 and judgment is reserved. 12 I was initially attracted to the idea that I should refuse leave to Epic serve out of the jurisdiction on the basis of Epic v Apple but with liberty to reapply in the event that the Full Court reversed the decision in that case. I communicated that view to Epic's solicitors and counsel who subsequently provided further submissions and evidence. Those submissions have persuaded me I should not take that course. 13 As Epic correctly points out, there is no evidence before me at present as to whether Google LLC is likely to apply for a stay and Epic bears no onus to prove such a matter on the present application. To exercise the discretion so as to refuse leave to serve out of the jurisdiction on the basis that Google LLC would inevitably apply for a stay which would then be granted would, therefore, be an exercise in speculation on my part. I do not think that I should speculate in that manner. Further, there are material differences between the position of Google LLC and the position of Apple Inc. In particular, unlike the situation obtaining in Epic v Apple, the local Australian subsidiary, ie Google Australia, is not party to the DDA and there is more substance in the contention that a stay is inappropriate because it will leave the proceeding on foot as between Epic and Google Australia. Indeed, Google Australia is party to a different agreement with Epic but that agreement contains a non-exclusive jurisdiction clause. Further, unlike the position of the Australian subsidiary in Epic v Apple, Google Australia has entered an unconditional appearance and arguably has waived any entitlement to apply for a permanent stay. Of course, it is neither necessary nor appropriate to determine these matters in the context of the present application. 14 As such, I do not think I should decline to grant leave to serve Google LLC on the basis that it will inevitably and successfully apply for a stay: Trina Solar (US), Inc v Jasmin Solar Pty Ltd [2017] FCAFC 6; 247 FCR 1 at [118] per Beach J, Dowsett J agreeing at [1]; [88] per Greenwood J; Tiger Yacht Management Ltd v Morris [2019] FCAFC 8; 268 FCR 548 at [99] per McKerracher, Derrington and Colvin JJ.

Hague Convention 15 I am satisfied that it is appropriate to permit service in the United States under the Hague Convention (noting that the United States does not object to any of the articles of that convention). Article 10(a) states: 'Provided the State of destination does not object, the present Convention shall not interfere with - (a) the freedom to send judicial documents, by postal channels, directly to persons abroad'. 16 Epic seeks leave to serve Google LLC via registered post at its principal place of business in Mountain View, California and by its Registered Agent, Corporation Service Company based in Delaware where Google LLC is registered. It is accepted in this Court that service by international registered post complies with Art 10(a): Kabbabe v Google LLC [2020] FCA 126 at [8]-[9] per Murphy J; Deputy Commissioner of Taxation v Power Assets Holdings Ltd (previously known as Hongkong Electric Holdings Ltd) [2013] FCA 708; 96 ATR 51 at [15]-[22] per Gordon J; Bell v Steele [2011] FCA 1390; 198 FCR 291 at [13], [16] per Collier J. I will grant leave to Epic to serve by registered international post.

Google Asia 17 I am satisfied that the requirements of FCR r 10.43(4)(a)-(c) are also satisfied in relation to Google Asia. It is alleged in the concise statement to be a party to the DDA. This appears to be correct because of the way 'Google' is defined in that agreement (as including Google Asia). Consequently, Google Asia is a party to the contractual restrictions previously referred to in relation to the Google Play Store. The claims under CCA Part IV are coherently made against it. The power to grant leave therefore arises and, for the reasons I have given, I propose to exercise the discretion so as to grant to leave to serve Google Asia. 18 Singapore is not a party to the Hague Convention. Consequently, Epic must satisfy FCR r 10.43(3)(c)(iii) and demonstrate that its proposed method of service is authorised by the law of Singapore. Epic relied upon the affidavit of Joan Lim-Casanova to which I have referred above. She gave evidence which I accept that under O 65 r 2A of the Rules of Court (Singapore) foreign processes could be validly served by a method of service authorised under those rules for the service of an analogous form of process issued by the Singaporean courts. Under O 10 and O 62 of the Rules of Court (Singapore) a writ must be served personally on a defendant. This may be effected by a process server of the court or by a solicitor or by a solicitor's clerk whose name and particulars have been notified to the Registrar: Rules of Court (Singapore) O 62 r 2(1); Supreme Court Practice Directions (Singapore) s32(1). In relation to corporate entities such as Google Asia, personal service may be effected by leaving the documents at or sending them by registered post to the company's registered office: Companies Act 1967/2006 (Singapore) s 387. Consequently, I am satisfied that service may be effected under the law of Singapore on Google Asia by serving the documents at its registered office.

Result 19 I will make the orders sought in the interlocutory application. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Perram.