It's never fun to see years and years of hard work go to waste. In particular, when you build an eCommerce site on a site like Etsy, Shopify, Amazon, or eBay, and get an email message or a letter informing you that you have violated a platform's terms of service or terms of use, and/or infringed the copyrights, or trademarks of other companies (for example, by being accused of selling counterfeit goods), and your website gets literally shut down without further notice. In some cases, the platform may try to seize funds owed to you, and refuse to pay.
While these companies have tremendous leeway in interpreting and enforcing their policies, there have been companies not satisfied with their response (including responses to appeal petitions), which may lack any level of specificity, leaving you to wonder why they took down your site, and will not reinstate it. This blog talks about some potential legal theories to consider if you want to fight back to get your site back up. While this may not be inexpensive to do, when you won't take no for an answer, and have no idea what you even did wrong, you may want to weigh your options.
Sample grounds for Apple takedown
Like many online companies, Apple has its own terms of use and standards. In regard to mobile applications, they look to the Apple's Developer Program License Agreement
One common ground for account termination is section 3.2(e), which states:
"You will not, through use of the Apple Software, Apple Certificates, Apple Services or otherwise, create any Covered Product, Corresponding Product, or other code or program that would:
(1) disable, hack or otherwise interfere with the Security Solution, or any security, digital signing, digital rights management, verification or authentication mechanisms implemented in or by iOS, iPadOS, macOS, tvOS, visionOS, watchOS, the Apple Software, or any Services, or other Apple software or technology, or enable others to do so (except to the extent expressly permitted by Apple in writing);
or
(2) violate the security, integrity, or availability of any user, network, computer or communications system;
And there is also 3.2(f) which states:
"You will not, directly or indirectly, commit any act intended to interfere with any of the Apple Software or Services, the intent of this Agreement, or Apple's business practices including, but not limited to, taking actions that may hinder the performance or intended use of the App Store, Custom App Distribution, TestFlight, Xcode Cloud, Ad Hoc distribution, or the Program (e.g., submitting fraudulent reviews of Your own Application or any third-party application, choosing a name for Your Application that is substantially similar to the name of a third-party application in order to create consumer confusion, or squatting on application names to prevent legitimate third-party use).
Further, You will not engage, or encourage others to engage, in any unlawful, unfair, misleading, fraudulent, improper, or dishonest acts or business practices relating to Your Covered Products or Corresponding Products (e.g., engaging in bait-and-switch pricing, consumer misrepresentation, deceptive business practices, or unfair competition against other developers)."
In this dispute, the developer of Musi app took issue with Apple's termination of its account. It is important to note, as I found online in a bulletin board:
Note: these numbers are not confirmed.
Musi Inc., vs. Apple
Here are sample allegations made in the complaint:
Musi is a mobile computing software company based in Canada that owns and operates the Musi app, an iOS-based mobile application. The Musi app provides users with enhanced functionality to interact with publicly available content on YouTube's website through its own augmentative interface—specifically, Musi's proprietary user interface components and proprietary organizational functionality/metadata. The Musi app does not rely on YouTube's Application Programming Interface (“API”), nor do Musi's servers store, process, or transmit YouTube videos. Instead, the Musi app plays or displays content based on the user's own interactions with YouTube and enhances the user experience via Musi's proprietary technology.
18. Apple's App Store is the primary means through which iOS apps are distributed to consumers. And as the developer, owner, and operator of the App Store, Apple enjoys singular power to choose which iOS apps are made available. However, these powers are limited by the terms and conditions enumerated in the Developer Agreement. Attached as Exhibit A is a true and correct copy of the Developer Agreement.
19. Apple requires all third-party iOS developers to enter into the Developer Agreement before they can develop apps using iOS. The Developer Agreement grants third-party developers a limited, personal, non-exclusive, and revocable license to use Apple's software and services, provided the third-party developer builds and operates its app in compliance with the terms and conditions contained therein. (Developer Agreement §§ 1.1, 2.1, 3.2(g), Ex. A)
20. If a third-party developer wishes to make its iOS app available for download on the App Store, it must apply for distribution with Apple. To qualify, the third-party developer must show that its app complies with the “Documentation and Program Requirements then in effect as well as with any additional guidelines that Apple may” place in the Developer Agreement.
21. Once the iOS app is deemed qualified for distribution by Apple (i.e., a “Licensed Application”), the third-party developer must agree to additional conditions enumerated in Schedule 1 of the Developer Agreement before the app can be distributed using the App Store.
22. Schedule 1 § 1.2(b) states that the third-party developer must authorize Apple to “provide hosting services . . . subject to the terms of the Agreement, in order to allow for the storage of, and end-user access to, the Licensed Applications” on the App Store.
23. And Schedule 1 § 4.1(b) requires the third-party developer to guarantee to Apple that “none of the Licensed Applications . . . violate or infringe any patent, copyright, trademark, trade secret or other intellectual property or contractual rights of any other person, firm, corporation or other entity.”
24. If a dispute arises over the content or use of a Licensed Application, the third-party developer must permit Apple to share its contact information with the party filing the dispute and to follow Apple's app dispute process “on a non-exclusive basis and without any party waiving its legal rights.”
25. Relatedly, Schedule 1 § 6.3 states that Apple “reserves the right to cease marketing, offering, and allowing download by end-users of the Licensed Applications at any time, with or without good cause, by providing notice of termination to” the third-party developer. (Developer Agreement, Schedule 1 § 6.3, Ex. A) However, Schedule 1 § 6.3 goes on to state, in relevant part: Without limiting the generality of this Section 6.3, [the third-party developer] acknowledge[s] that Apple may cease allowing download by end-users of some or all of the Licensed Applications, or take other interim measures in Apple's sole discretion, if Apple reasonably believes, based on human and/or systematic review, and, including without limitation upon notice received under applicable law, that: . . . (ii) those Licensed Applications and/or any end-user's possession and/or use of those Licensed Applications, infringe patent, copyright, trademark, trade secret or other intellectual property rights of any third party.
26. If the Licensed Application charges end-users a fee of any kind through its use, the third-party developer must also enter into a separate agreement with Apple, named Schedule 2, “before any such commercial distribution of [the] Licensed Application may take place via the App Store.” (Developer Agreement § 7.2, Ex. A) And if the third-party developer wishes to sell its iOS app “for a fee through Custom App Distribution,” then the developer must separately agree to the terms enumerated in another agreement named Schedule 3. Id. Attached as Exhibit B is a true and correct copy of Schedules 2 and 3 of the Developer Agreement.
27. Notably, Schedule 2 § 7.3 and Schedule 3 § 7.3 contain identical language as Schedule 1 § 6.3, stating in relevant part: Schedule 2 . . . 7.3. Apple reserves the right to cease marketing, offering, and allowing download by End-Users of the Licensed Applications at any time, with or without cause, by providing notice of termination to You. Without limiting the generality of this Section 7.3, You acknowledge that Apple may cease the marketing and allowing download by End-Users of some or all of the Licensed Applications, or take other interim measures in Apple's sole discretion, if Apple reasonably believes, based on human and/or systematic review, and, including without limitation upon notice received under applicable laws, that:
(ii) those Licensed Applications and/or any End-User's possession and/or use of those Licensed Applications, infringe patent, copyright, trademark, trade secret or other intellectual property rights of any third party . . . . (Developer Agreement, Schedule 2 § 7.3, Ex. B) Schedule 3 . . . 7.3. Apple reserves the right to cease marketing, offering, and allowing purchase by Custom App Distribution Customers and download by End-Users of the Custom Applications at any time, with or without cause, by providing notice of termination to You. Without limiting the generality of this Section 7.3, You acknowledge that Apple may cease the marketing and allowing download by End-Users of some or all of the Custom Applications if Apple reasonably believes, based on human and/or systematic review, and, including without limitation upon notice received under applicable laws, that: . . . (ii) those Custom Applications and/or any End-User's possession and/or use of those Custom Applications, infringe patent, copyright, trademark, trade secret or other intellectual property rights of any third party . . . .” (Developer Agreement, Schedule 3 § 7.3, Ex. B)
This case arises from Apple's abrupt removal of Musi's mobile software application (the “Musi app”) from the Apple App Store (“the App Store”), based upon an unsubstantiated third-party complaint, and in violation of the parties' contractual agreements. Despite its obligations to investigate complaints in good faith, Apple removed the Musi app based upon unsupported accusations from a third party who has failed to respond to Musi's communications. Worse, Apple was fully aware that the third party had failed to substantiate its claims to Musi. Apple's improper removal of the Musi app has caused—and continues to cause—substantial harm to Musi's business and reputation.
Plaintiff Musi is a mobile computing software company and the developer, owner, and operator of the Musi app, which provides users with enhanced functionality to interact with publicly available content on YouTube's website through an augmentative interface. Since its inception, and until September 24, 2024, when it was removed by Apple, the Musi app has only been available for download on the Apple App Store—an online marketplace for apps that is pre-installed on Apple smartphones.
On September 24, 2024, Apple abruptly removed the Musi app from the App Store on the basis of a five-word complaint dated July 29, 2024 from a complainant identified as “YouTube Legal” (“Complainant”), with no supporting evidence or documentation. Despite Musi's efforts to contact Complainant to understand the nature and basis of its concerns, Complainant failed to either respond to Musi or to substantiate its accusations. Musi, on the other hand, has promptly responded to all of Apple's communications regarding the complaint.
Even more concerning, in April and May of 2021, Musi engaged with outside counsel for YouTube (apparently the same Complainant) to address several questions YouTube had about the functionality of the Musi app and compliance with the YouTube Terms of Service. Musi substantively addressed YouTube's concerns but heard nothing further from YouTube until several years later in March 2023, and July 2024 when YouTube sent a standard notice to Apple stating that the Musi app violated its intellectual property rights without any explanation. Musi again contacted YouTube to address its concerns without receiving any response. During that time, Musi continued to offer the Musi app on the App Store, operating in substantially the same manner, without incident.
Apple nonetheless suddenly and unjustifiably removed the Musi app from the App Store on the basis of the July 2024 complaint. To date, the Musi app has not been restored. The removal was all the more galling in light of the fact that Apple threatened to remove the app if Musi did not try to resolve the alleged complaint with the Complainant, and Apple was fully aware that the Complainant had elected not to communicate in any way directly with Musi.
Apple's unjustifiable removal of the Musi app from the App Store not only violates the implied covenant of good faith and fair dealing, but also Apple's own contractual obligations to developers who make applications available on the App Store. This civil action states claims and seeks monetary, injunctive, and other appropriate relief for Apple's breach of contract and breach of the implied covenant of good faith and fair dealing.
In the past, when YouTube has raised a question concerning the Musi app's functionality, Musi has, in good faith, consistently either (a) adjusted the app's functionality, or (b) provided details about how the Musi app works and explained why it is fully compliant with YouTube's Terms of Service. In April 2021, YouTube's outside counsel raised several questions regarding the Musi app's functionality. Specifically, YouTube's counsel claimed that the Musi app violated YouTube's Terms of Service because (1) the Musi app accessed and used YouTube's non-public interfaces; (2) the Musi app used the service for a commercial use; and (3) the Musi app violated YouTube's prohibition on the sale of advertising “on any page of any website or application that only contains Content from the Service or where Content from the Service is the primary basis for such sales.”
Musi addressed these concerns by explaining to YouTube's counsel that (1) at no point does the Musi app access YouTube's non-public interfaces; (2) the Musi app merely allows users to access YouTube's publicly available website through a functional interface and, thus, does not use YouTube in a commercial way; and (3) the Musi app does not sell advertising on any page that only contains content from YouTube or where such content is the primary basis for such sales. Musi provided a detailed basis in support of these conclusions, and explained why YouTube's assertions were premised on a misunderstanding of the Musi app's functionality. YouTube never responded. Instead, in March 2023, YouTube again complained about the Musi app's functionality, to which Musi promptly responded. YouTube—again—failed to respond. Since that time, Musi has continued to offer the Musi app on the App Store. Musi has conducted routine updates to the Musi app, but the Musi app has otherwise operated in a substantially similar manner since May 5, 2021.
On August 8, 2024, Apple—via representatives of its App Store—emailed Musi, stating that it had received a notice from “YouTube Legal” “that Claimant believes” that the Musi app “infringes its intellectual property rights” and directed Musi to “see their comments below.” The referenced comments simply stated “violating YouTube Terms of Service.” Attached as Exhibit C is a true and correct copy of the August 8, 2024 Email from Apple. Apple's August 8, 2024 email did not provide any further details regarding the bases behind Complainant's assertions. The nature of Complainant's intellectual property was not described. And the specific sections of Complainant's Terms of Service allegedly violated by the Musi app were not named or cited. Nevertheless, Musi's attorney promptly responded to Apple and Complainant on August 12, explaining that these accusations were “unsubstantiated,” and that Musi had previously contacted Complainant directly to resolve the dispute but had received no response. Attached as Exhibit D is a true and correct copy of Musi's August 12, 2024 through September 6, 2024 responses. A month later, on September 6, Complainant emailed Apple again, inaccurately claiming that Musi failed to initiate contact to resolve the matter. Ex. D.
In doing so, Complainant carbon copied—without explanation—several third parties that have no apparent relation to the matter. Nonetheless, Musi again promptly responded that same day to correct the record and reiterate that the Musi app did not infringe Complainant's intellectual property or violate Complainant's terms of service. Musi again invited Complainant to discuss its concerns. Attached as Exhibit E is a true and correct copy of Musi's September 6, 2024 response to Complainant. But again, Musi did not receive a response from Complainant. 39. Ignoring Musi's communications entirely, on September 18, 2024, Apple advised Musi that, according to its records, the matter remained unresolved. Musi responded by explaining to Apple that Musi's communications to Complainant had gone unanswered and reiterated that Complainant had failed to provide any relevant information regarding its complaint. Attached as Exhibit F is a true and correct copy of Musi's September 18, 2024 through September 24, 2024 responses. Having heard nothing further from either Complainant or Apple, Musi's counsel followed up with Apple on September 24, 2024 updating Apple that:
To date, we have received no communication from the Complainant in response to our September 6 correspondence, nor has the Complainant substantiated its complaint with further details. Musi acknowledges under the Apple Developer Program License Agreement that it has agreed to indemnify and hold Apple harmless with respect to claims against its app. Musi will continue to keep App Store Notices informed as to the status of this dispute. Apple responded by ignoring Musi's communications altogether and stating that “your app will be removed from the App Store on the basis of intellectual property infringement,” which it did later that day. Attached as Exhibit G is a true and correct copy of the September 24, 2024 response. Apple's decision to abruptly and arbitrarily remove the Musi app from the App Store without any indication whatsoever from the Complainant as to how Musi's app infringed Complaint's intellectual property or violated its Terms of Service, and in light of the fact that Musi has continued to operate the Musi app in a substantially similar matter since May 2021, was unreasonable, lacked good cause, and violated Apple's Development Agreement's terms. Apple's decision has caused immediate and ongoing financial and reputational harm to Musi. Without the Court's immediate intervention, Musi and consumers face irreparable damage.
CONSENT TO NORTHERN CALIFORNIA FEDERAL DISTRICT COURT
In these types of mobile application disputes, no matter where the developer is located, a lawsuit will likely need to be filed in the Northern District of California:
Section 14.10 of the Developer Agreement provides that “[a]ny litigation or other dispute resolution” between the parties “arising out of or relating to this Agreement, the Apple Software, or [the parties'] Relationship . . . will take place in the Northern District of California,” and that the parties “consent to the personal jurisdiction of and exclusive venue in the state and federal courts within that District.”
B. Causes of action alleged
Musi alleged causes of action for breach of contract, and breach of the implied obligation of good faith and fair dealing (see their arguments below)
C. Relief sought
WHEREFORE, Musi respectfully prays for judgment against Apple, and that the Court decree as follows:
a. The conduct alleged in the First Cause of Action herein be adjudged to constitute an unjustified breach of contract under California law;
b. The conduct alleged in the Second Cause of Action be adjudged to constitute a breach of the covenant of good faith and fair dealing under California law;
c. That Musi be entitled to a preliminary and permanent injunction to have the Musi app restored on the App Store platform.
d. That Musi be awarded direct, actual, compensatory, and/or consequential damages on its breach of contract and breach of the implied covenant and good faith and fair dealing claims, and that Apple be preliminarily and permanently enjoined from continuing to engage in the underlying wrongful conduct and ordered to immediately reinstate the Musi app to the App Store.
e. Award Musi prejudgment interest at the maximum legal rate;
and
f. For such other and further relief that this Court deems just and proper.
D. Apples Defense (Response)
Apple has filed a motion to dismiss, which is scheduled to be heard in April, 2025. Here is part of their legal argument being made in support of dismissal of Musi's complaint (pulled from the Joint Case Management Statement):
Apple licenses certain technology and tools to third-party developers, to allow them to develop native applications (“apps”) for iOS, Apple's proprietary mobile operating system, and to distribute those apps on Apple's App Store. Apple's agreements with third-party app developers expressly provide that Apple reserves the right to remove an app from App Store at any time in its sole discretion. Apple's contractual right to remove apps from App Store is essential to its ability to ensure that App Store remains a safe and trusted environment for both its users and developers.
Musi owns and operates the Musi – Simple Music Streaming app (the “Musi app”). The Musi app allows users to access content from YouTube through Musi's own augmented interface, which replaces YouTube's advertising content with Musi's own advertisements to generate revenue. While the Musi app was on App Store, the app was free to download, though users could also pay a one-time fee for ad-free streaming. Since launching in or around 2013, the app has amassed millions of users. Musi has been in conversation with YouTube about the Musi app and its compliance with YouTube's Terms of Service since at least 2015. In April 2021, outside counsel for YouTube identified several specific concerns YouTube had with the Musi app's functionality, including the Musi app's use of YouTube content for commercial purposes, and in connection with paid advertising.
Musi disputed YouTube's understanding of the Musi app's functionality, but Musi and YouTube did not reach a final resolution regarding YouTube's concerns. In March 2023, Apple received a complaint from YouTube that the Musi app infringes YouTube's intellectual property rights—specifically, its Terms of Service. Apple shared this complaint with Musi, and Musi responded that the complaint was unsubstantiated, but the complaint otherwise went unresolved. On July 29, 2024, YouTube contacted Apple to reiterate its position in the March 2023 complaint that the Musi app violates YouTube's Terms of Service. This came after a July 15, 2024 phone call between Apple and YouTube, during which YouTube asserted that Musi's use of YouTube's Application Programming Interface (“API”) violated YouTube's Terms of Service. Apple notified Musi of YouTube's complaint on August 8, 2024, informing Musi that failure to resolve the complaint directly with YouTube could result in removal of the Musi app from App Store.
While Musi repeated its position that YouTube's complaint was unsubstantiated, the complaint remained unresolved even after multiple follow-ups from Apple. In addition to YouTube's complaints, Apple has received multiple complaints from other third parties regarding the Musi app's functionality, including complaints from organizations within the music industry that the app's streaming practices infringe the copyrights of these organizations and their members. Apple has received such complaints from, among others, the International Federation of the Phonographic Industry (“IFPI”), Universal Music Group (“UMG”), Sony Music Entertainment (“SME”), and the Recording Industry Association of America (“RIAA”). IFPI's formal complaint, in particular, resulted in extensive correspondence among IFPI, Musi, and Apple over several months, culminating in IFPI stating its position that “Apple has the requisite knowledge of [Musi's] illegal activity” and requesting that “the [Musi] app be removed the App Store without further delay.” Dkt. 30 at 6. In September 2024, the National Music Publishers Association (“NMPA”) submitted a letter to Apple in support of YouTube's July 2024 complaint, which included what NMPA described as evidence of Musi's violations of YouTube's Terms of Service and its impact on the licensing rights of NMPA's members, claiming that the Musi app “leeches its content offerings from YouTube's [API] to avoid paying copyright licensing fees” and thus “diverts royalties from music publishers and songwriters to itself.” Id. at 7-8. Apple removed the Musi app from App Store on September 24, 2024, following Musi's failure to resolve the July 2024 YouTube complaint, and following the numerous additional complaints from the music industry outlining Musi's potential copyright violations.
Apple denies that it violated any laws and maintains that it acted fully within the scope of its contractual rights when it removed Musi's music streaming app from App Store. Musi has moved for a preliminary injunction (Dkt. 10) that would force Apple to reinstate Musi's music streaming app to Apple's App Store notwithstanding Apple's express contractual right to remove the app from App Store “at any time, with or without cause.” See Apple's Developer Program License Agreement, Schedule 1, § 6.3. Apple has moved to dismiss Musi's Complaint (Dkt. 33).
Apple cited some cases in the joint case management statement:
“It is a bedrock principle of California law that no cause of action will lie where it is based on lawful conduct expressly permitted by a governing contract.” Sweet v. Google Inc., 2018 WL 1184777, at *5 (N.D. Cal. Mar. 7, 2018). As such, courts in this district regularly dismiss with prejudice breach of contract and implied covenant claims where, as here, the governing contract grants the defendant sole discretion to engage in the challenged conduct. See, e.g., Song fi Inc. v. Google, Inc., 108 F. Supp. 3d 876, 884-85 (N.D. Cal. 2015) (dismissing breach of contract and implied covenant claims with prejudice where the YouTube Terms of Service authorized YouTube “to relocate or remove videos in its sole discretion” and to “discontinue any aspect of the Service at any time”); Intango, LTD v. Mozilla Corp., 2020 WL 12584274, at *6-7 (N.D. Cal. Aug. 25, 2020) (dismissing breach of contract and implied covenant claims with prejudice where the parties' Distribution Agreement allowed Mozilla to remove plaintiff's addons “at any time”); Sweet, 2018 WL 1184777, at *10 (dismissing all of plaintiff's claims (including for breach of contract and breach of the implied covenant) with prejudice where “the terms of the agreement [were] clear” that defendant had sole discretion to determine whether to post advertising content alongside plaintiffs' videos); Prager Univ. v. Google LLC, 85 Cal. App. 5th 1022, 1037 (2022) (affirming dismissal of breach of contract claim where “the parties ‘entered into written contracts' granting defendants ‘unfettered[] and unilateral discretion to remove, restrict, demonetize, or de-emphasize content as [d]efendants see fit”).
What to do when your account gets taken down
While there are never any guarantees you will ever get your mobile application reinstated, or your Etsy listings reinstated, it is important to examine some of the common grounds to file a lawsuit. Before you EVER respond to a takedown notice, and before you EVER respond in writing, if you really care about your online business you should discuss your case with an internet and IP lawyer such as ours. Once you put that pen to paper, you will not be able to retract what you said. Think before you act.
Possible causes of action against Apple, Facebook, Etsy, Amazon, eBbay, Shopify and others for wrongful account takedown:
- Unfair competition (Cal Business & Professions Code Section 17200)
California's UCL prohibits any "unlawful, unfair or fraudulent business act or practice." Cal. Bus. & Prof. Code § 17200. "Each prong of the UCL is a separate and distinct theory of liability." Dunkel v. eBay Inc.,No. 5:12-CV-01452-EJD, 2013 WL 415584, at *10 (N.D. Cal. Jan. 31, 2013) (quoting and citing Birdsong v. Apple, Inc.590 F.3d 955, 959 (9th Cir. 2009)). "[A] plaintiff must have suffered an injury in fact' and lost money or property as a result of the unfair competition' to have standing to pursue either an individual or a representative claim under the California Unfair Competition Law." Jensen v. Quality Loan Serv. Corp,702 F.Supp.2d 1183, 1199 (E.D. Cal. 2010) Campbell v. Ebay, Inc., 13-CV-2632 YGR, (N.D. Cal. Sep. 5, 2013)
- Unjust enrichment (if they refuse to return monies owed to you).
MUSI ARGUMENT: Apple breached several conditions contained in the Developer Program License Agreement, including Schedule 1 § 6.3, Schedule 2 § 7.3, and Schedule 3 § 7.3 (the “Sections”). These Sections curtail Apple's ability to remove any Licensed Applications, including the Musi app, from its App Store. Specifically, these Sections provide that Apple may only cease the download of any Licensed Application on the App Store if Apple “reasonably believes, based on human and/or systematic review,” that the Licensed Application infringes “patent, copyright, trademark, trade secret or other intellectual property rights of any third party.”
Based upon the correspondence to date, Apple had no reasonable basis to believe that the Musi app infringed Complainant's intellectual property rights. Accordingly, Apple removed the Musi app from the App Store in violation of the terms of its own Developer Agreement.
As a direct and proximate result of Apple's breach, Musi has suffered direct, actual, compensatory, and consequential damages in an amount to be determined at trial. Those damages include but are not limited to lost profits and other consequential damages that are not waivable by contract as a matter of law due to Apple's heightened culpability. Musi is also entitled to injunctive relief to prevent Apple's continuing breach.
- Breach of the implied obligation of good faith and fair dealing
MUSI ARGUMENT: California law implies in every contract a covenant of good faith and fair dealing, such that neither party will compromise the rights of the other to receive the benefits of the contract. The covenant aims to effectuate the contract's guarantees, and to protect the parties' expectations.
In doing so, the covenant requires each party to do all things reasonably contemplated by the contract's terms. For this reason, under the Development Agreement, Apple has a continuing obligation to act in good faith and deal fairly with Musi, as it does with all its partners. Schedule 1 § 6.3, as well Schedules 2–3 § 7.3, provide that Apple may only cease marketing and/or allowing downloads by end-users of Licensed Applications on the App Store if Apple “reasonably believes, based on human and/or systemic review,” that the Licensed Applications infringed a third-party's intellectual property rights. Accordingly, Apple was required to perform its contractual obligations in good faith and to avoid any acts or material omissions which unfairly interfere with the right of Musi to receive the benefits of the Developer Agreement.
Upon information and belief, Apple violated its covenant of good faith and fair dealing by failing to ensure that the Complainant had provided to Musi—in response to Musi's repeated requests—the bases for its complaint, so that the two parties might attempt to resolve any issues as had been the case in prior dealings with the parties, before removing the Musi app. Had Apple met its duty of good faith and fair dealing, the Musi app would never have been removed for violating Schedule 1 § 6.3, Schedules 2 § 7.3, and Schedule 3 § 7.3.
Musi and the Musi app were fully compliant with the contractual obligations enumerated in Apple's Development Agreement. The Musi app did not and does not infringe any intellectual property rights held by Complainant, and a reasonable inquiry into the matter would have led Apple to conclude the same. Despite this, Apple abruptly removed the Musi app from its App Store without conducting a reasonable inquiry. Thereby, in effect, taking an affirmative step to frustrate the purpose of the Development Agreement.
As a direct and proximate result of Apple's breach of the covenant of good faith and fair dealing, Musi has suffered direct, actual, compensatory, and consequential damages in an amount to be determined at trial, plus prejudgment interest at the maximum legal rate. Those damages include but are not limited to lost profits and other consequential damages that are not waivable by contract as a matter of law due to Apple's heightened culpability. Musi is also entitled to injunctive relief to prevent Apple's continuing breach.
Musi cited a few cases in support:
- Kelly v. Skytel Commc'ns, Inc., 32 F. App'x 283, 287 (9th Cir. 2002) (despite language purporting to grant sole discretion to commission decisions, “a failure by the Excellence Committee to properly investigate Kelly's submission for an over-the-maximum commission would violate the implied covenant of good faith and fair dealing, as would any other arbitrary means of decision making used by the Committee.”);
- InfoStream Grp., Inc. v. PayPal, Inc., 2012 WL 3731517, at *8 (N.D. Cal. Aug. 28, 2012) (denying motion to dismiss implied covenant claim where allegation that “PayPal acted in bad faith by terminating the agreement for the sole purpose of benefitting plaintiffs' competitors” was “sufficient”);
- Campbell v. eBay, Inc., No. 13-CV-2632 YGR, 2014 WL 3950671, at *2 (N.D. Cal. Aug. 11, 2014) (denying motion to dismiss based on allegation that eBay violated the implied covenant by “failing to investigate the facts of the disputes/claims and has decided in favor of dishonest, deceptive buyers.”).
More Apple App Dispute Blogs and ResourcesHow to file a mobile app dispute with Apple
- Safety issues as a ground for Apple to remove your APP from the app store
- How to appeal an adverse mobile app removal on Google Play
- The App Lawyer - legal services overview
- How to appeal adverse mobile application decisions
