Epic Games v. Apple on App Store Payment Systems in South Korea

By: Inyoung Cheong

Why Did Epic Games’ CEO Claim to be South Korean?

As a South Korean, it felt surreal to see Oli London, a British YouTube influencer, claiming to be Korean following multiple plastic surgeries. Although Korean culture has been well-promoted by the band BTS (and more recently by the Netflix show, Squid Game), I never imagined that a non-Korean would ever want to be Korean. Soon after, more astonishing news came out. Tim Sweeney, the CEO of Epic Games, one of the most influential video game companies in the world, tweeted “I am a Korean!” Why is this high-profile figure so thrilled about my home country? 

How Epic Games Was Treated in the U.S.

Epic has been involved in a serious dispute with Apple since 2015 when Tim Sweeny questioned the necessity of digital marketplaces, like Apple’s App Store for iOS devices and Google Play, taking 30% of app-generated revenue. To avoid the 30% charge, Epic released an installer in mid-2020 for its massively popular video game, Fortnite “Season 4,” with a feature, codenamed “Project Liberty,” that offered a 20% discount for in-game money when users chose to directly purchase the game from Epic. Apple took down the app Fortnite for violating its App Store’s terms of service within hours, leaving iOS and macOS users unable to update their video game. Apple has claimed that in-app purchase policies “ensure that iOS apps meet Apple’s high standards for privacy, security, content, and quality.” However, app developers view this system as monopolistic and exploitative, one that allows companies like Google and Apple to make a quick profit without providing value to developers or consumers. 

Interview with Tim Cook on Sway, April 5 2021

In the United States, the U.S. District Court for Northern California did not fully agree with antitrust claims brought by Epic Games against Apple regarding this issue. While Judge Yvonne Gonzalez Rogers issued a permanent injunction in this case in September 2021 that requires Apple to allow app developers to communicate with users about alternative payment systems, Epic Games suffered a pyrrhic victory. Judge Rogers rejected the allegation that Apple’s App Store is a monopoly and ordered Epic Games to pay Apple 30% of all revenue collected through the system since it was implemented for breach of contract. This award amounts to a sum of more than $3.5 million. On Twitter, Tim Sweeney expressed his disappointment, saying “[t]oday’s ruling isn’t a win for developers or for consumers.” 

It’s important to also note that while the lawsuit was still ongoing, Apple lowered its commission from 30% to 15% for developers that make under one million U.S. dollars per year. 

The World’s First Law Directly Regulating In-App Purchase Systems 

In contrast to the United States District Court for the Northern District of California, South Korean lawmakers turned out to be more empathetic to app developers. In an exceptional move, South Korean lawmakers made the practice of forcing app purchases through particular virtual storefronts illegal. In August 2021, South Korea’s National Assembly enacted amendments to the country’s Telecommunications Business Act that commits the Korea Communications Commission (KCC) to preventing online platforms from requiring certain payment methods, unfairly delaying the review of mobile content, and unfairly deleting mobile content from the app market. In Apple’s case, an app-developer whose app was removed from Apple’s App Store can simply file a complaint with the KCC and seek an administrative penalty against the App Store instead of bringing a time-consuming lawsuit. Currently, it appears that South Korea is the only country on the planet to enforce this type of legislation, hence Time Sweeney’s jubilant cry, “I am a Korean!”

Debates Over the New Law in the South Korea’s National Assembly 

Predictably, both Google and Apple recently worked with local major law firms in appealing to the legislature to block passage of the bill. Global business organizations including the American Chamber of Commerce in Korea, NetChoice, Asian Trade Center, and Asia Internet Coalition also filed objections to the bill. All of these groups argued that compliance with in-app purchase policies contributes to creating safe, secure, and credible digital platforms that have enabled developers to sell their products abroad. 

Affected tech companies even turned to the U.S. government and accused the bill of being a non-tariff trade barrier in violation of a joint trade agreement, but the Biden administration did not take official action other than briefly mentioning the issue in the U.S. Trade Representative National Trade Estimate Report in March 2021. According to the New York Times, this inaction reflects the Biden administration’s critical attitude towards these tech giants’ incredible power over commerce.

In addition, legislative documents demonstrate disagreement between various Korean government agencies. The Korea Fair Trade Commission (Korea FTC) initially opposed this bill because “forcing payment systems” could be regulated by antitrust authorities as predatory conduct without introducing new telecommunication regulations. In the end however, Korea FTC reluctantly agreed to the KCC’s jurisdiction into this area after weathering President Moon and lawmakers’ relentless concerns and rebuke concerning the current disparity in app markets. 

Google and Apple Took Different Approaches 

Just after the enactment of the new law, Epic Games requested that Apple restore Fortnite to operational condition in South Korea, but Apple declined. Apple said, “we would welcome Epic’s return to the App Store if they agree to play by the same rules as everyone else.” The KCC then requested that Apple and Google submit compliance plans by October 2021. Both companies’ initial plans were, however, turned down by the KCC. 

Before submitting a new plan, Wilson L. White, Google’s public policy and government relations senior counsel, had a conference with a KCC chairman on November 4th. White committed to giving developers “the option to add an alternative in-app billing system alongside Google Play’s billing system for their users in Korea.” 

In contrast to Google’s move, Apple remains resistant. Apple is holding its ground, stating that its current policy is already compliant with the law, even though a KCC official made it clear that Apple’s position “goes against the law.” The South Korean local newspaper ETNEWS reported that Apple CEO Tim Cook ordered “we should not step back in South Korea.” It was also announced that Apple’s Korea unit chief Brandon Yoon resigned from his position. A South Korean lawmaker, Jo Seung-rae, opined that neither Apple nor Google are doing enough to comply with South Korea’s new law and called Apple’s claim that it complied with the law “nonsensical.”

Tim Sweeney’s Push and KCC’s Remaining Tasks 

Tim Sweeny gave a speech in South Korea on November, 15, 2021, saying “Apple is ignoring laws passed by Korea’s democracy. Apple must be stopped.” He also expressed his strong support for South Korea’s anti-monopoly push during a video conference with the Korea Communications Commission’s Chair, Han Sang-hyuk, on November 17. Chair Han said, “[f]or a platform ecosystem where everyone coexists, not only the government, but also platform companies, content producers, creators, and users need to participate in making changes.”

Last month, the KCC initiated notice-and-comment rulemaking procedures. The KCC notified the public about the implementation of an ordinance that allows the KCC to impose monetary penalties of up to two percent of a company’s revenues on companies that do not comply, although the precise definition of “revenues” has not been settled and it remains to be seen whether “revenues” applies to South Korea alone or the global market. While there are still shortcomings in the law and complexities to iron out, it is undeniable that this new Korean law has ignited meaningful policy discussions over mobile app market practices around the world.

Inyoung Cheong is a Ph.D. Candidate at the University of Washington School of Law and former Deputy Director of the Korea Communications Commission. 

Strange Bedfellows: Vienna Museums Open OnlyFans Account for Nude Art

By: Laura Ames

This October, OnlyFans, the social media platform known for hosting explicit content, gained a rather surprising new account: a consortium of Viennese museums. The museums are using their account to post pieces of nude fine art from their collections that have been censored or taken down by other social media sites. This unique solution is a symptom of larger issues surrounding social media sites grappling with what content to allow and the imperfect application of guidelines. 

Museums Take Action Against Censorship 

According to a spokesperson for the Vienna Tourism Board, the museums launched their “Vienna Laid Bare” program after they found their social media accounts suspended for posting images of their nude artwork.  The Board’s website identifies these institutions as “casualties” of a “new wave of prudishness” from social media platforms, proving that the fight against censorship that these artists originally faced is still going strong over 100 years later. The Tourism Board directly frames this campaign as a reaction to and protest against censorship. In response to censorship and bans, the museums turned to OnlyFans to post their banned work, ranging from paintings to a 25,000 year old limestone figurine.

Founded in 2016, OnlyFans is marketed as a social media platform that is “inclusive of artists and content creators from all genres.” OnlyFans requires users and creators to be at least 18 and has become the platform for explicit content. As of January 2021, the site had over 100 million users and over 1 million creators. As with other content on the platform, users must subscribe to the Vienna museums’ account in order to access their content. 

Social Media Sites’ Rules and Uneven Application 

Vienna is not alone in its struggle to post content containing nude artwork. Institutions have been running afoul of increasingly rigid nudity policies for years. Most social media sites’ guidelines purport to allow exceptions for some explicit content, including art. For example, Facebook’s Community Standards say that users may post nude artwork even though explicit content is generally banned. Instagram, which is owned by Facebook, has a similar rule allowing nudity in photos of paintings and sculptures. Rounding out the trio of commonly used sites, TikTok’s policies say the platform may allow exceptions to banned nudity for certain purposes like educational and artistic content. OnlyFans itself, even though it is marketed as an adults-only site, has not been able to avoid this censorship debate. In August 2021, OnlyFans announced it was banning explicit content due to credit card companies’ discomfort with handling pornography-related transactions. This announcement prompted a panic and outcry among creators and many left the platform. In response, the platform reversed its decision  just a few days later. 

Given that these policies all seem to allow exceptions for art, the question becomes why the Vienna museums needed to turn to OnlyFans at all. The answer comes in the shape of these sites’ uneven track record in applying their standards. In a similar situation, the Flemish Tourism Board complained in 2018 that Facebook had repeatedly censored nude paintings from famous artist Peter Paul Rubens. That same year, a French court held that Facebook was at fault for removing a French teacher’s post of a nude painting by Gustave Courbet. Similarly, online arts magazine Hyperallergic wrote earlier this month that Facebook contacted its marketing team about promotional material for the magazine’s upcoming exhibition of work by artist Suzanne Valadon. Facebook told the team that the paintings featured in the advertisement were inappropriate for the platform. In affirming this decision, Facebook directed Hyperallergic to a webpage explaining its policy for explicit content, which seemed to contradict the decision by saying that a photo of a nude statue would be appropriate.  And this year, TikTok banned Vienna’s Albertina Museum for posting nude photography. It appears that these sites are often overbroad in their efforts to take down or censor banned material. These accidental removals are often due to sites using artificial intelligence to flag banned content. 

Larger Censorship Issues

With this uneven application of guidelines, it makes sense that the museums would turn to an alternative site to post their content, but those involved in the project argue this effort is about more than generating clicks for the institutions. Nobert Kettner, Director of the Vienna Tourist Board, says  the OnlyFans account will not be a permanent feature but is an act of protest against censorship and a way to prompt discussion of the issue. Artists and others argue that finding alternative platforms to post nude art cannot be the only solution to combating censorship. Artists point out that efforts like this one chiefly provide visibility to historical and established artists, while the larger issue is that current and new artists are falling prey to social media platforms’ restrictive rules and struggling to get exposure.   

Beyond the ramifications for museums and artists, this debate about censorship is taking place amidst larger discussions about social media sites’ power to moderate and remove content in general.  For example, several states have proposed or passed legislation aiming to prohibit social media sites from censoring certain content, particularly political content. These bills would allow private citizens in these states to sue social media platforms for removing or moderating content based on a user’s politics. Lawmakers behind this legislation in Wisconsin argue that these laws will require companies to be transparent and consistent with their policies. Critics argue that some amount of censorship is necessary to prevent the spread of misinformation and that social media companies have First Amendment rights to decide what content to host. Currently, these efforts to curb censorship of political content have gained more attention than similar efforts in the art world, but the debate over censorship of all types of content rages on. 

Your Employer Can Monitor You While You Work From Home—Should They?

By: Joshua Waugh

Since “pandemic life” began, as many as 40% of American workers have worked from home. If you’ve been lucky enough to trade the crowded bus or the gridlocked highway for the shorter bedroom-to-laptop commute, chances are you’ve wondered just how closely your employer is watching you. The truth is that telework, for all its benefits, also has a major downside: near limitless opportunity for high-tech surveillance. And while it is clear that employers have the legal capability and the technology to monitor their employees, it’s less clear that employee surveillance is actually a good idea at all.

Can my employer really monitor me?

It is no secret that American privacy and technology laws are often lacking. At the federal level, the primary law dealing with electronic privacy is the Electronic Communications Privacy Act (ECPA), which was passed in 1986. The law is so old that Title I of the Act only contemplates a third party’s “interception” of a message sent by “wire, oral, or electronic communication”; the law doesn’t address the possibility of accessing stored communications, such as email, post-transmission.

Furthermore, Title I of the ECPA has been interpreted to include a carveout specifically allowing employers to monitor employees as long as the employer can show a legitimate business purpose. The ECPA also permits employers to electronically surveil employees upon their consent, which, given often imbalanced employee-employer power dynamics, is not great for the ordinary employee.

Title II of the ECPA, or the Stored Communications Act (SCA), provides more protection to employees, though the law is still just as dated as Title I. Under the SCA it is fairly well established that your employer can’t log in to your personal email without your permission. So rest assured, your employer cannot see the thousands of unread advertising emails in your inbox unless you give them access.

All of that said, there is not much legislation on electronic privacy at the federal level. That may seem surprising considering we’ve seen privacy controversy after privacy controversy from practically every big tech company in recent years, but electronic privacy regulation seems to be generally left to the states. The end result is that only Californians (and to a lesser extent Coloradans and Virginians) enjoy broad statutory protections against electronic employer surveillance. In most of the other states, as long as you are using an employer’s device or network, your employer may surveil you as much as they’d like. And surveillance software is readily available, including keyloggers that record every keystroke you make, activity monitors, and even software that records every website or app you access on the device. In fact, if your workplace is using the Microsoft Office 365 Suite, your employer is already able to monitor and analyze your work activity.

Where do we go from here?

If you’re concerned about your general lack of privacy rights living in America, you are not alone. Researchers have published studies showing that extensive employer surveillance can breed distrust among employees and such surveillance can be a significant hindrance on worker productivity and other positive performance outcomes. The feelings of distrust are even stronger when employees discover that they were being surveilled without their knowledge.

Despite evidence suggesting employee surveillance may have negative effects, surveys show that 62% of executives planned to use monitoring software in 2019, and that number is certain to have grown during the pandemic work-from-home era. Meanwhile, we’re also in the midst of a radical transformation in the labor force—the U.S. Bureau of Labor Statistics reported that 2.9% of the entire U.S. workforce, 4.3 million people, quit their jobs in August 2021. By all appearances, the Great Resignation is accelerating as 4.4 million workers went on to quit during September 2021, topping August’s record numbers. At a time when people are rethinking their relationship with work, struggling with burnout, and dealing with burdensome household issues such as child- and elder-care, employers should spend less time secretly surveilling their employees, and instead put effort into employee engagement. Essentially the opposite of paranoid surveillance, companies should engage with their workers by providing flexibility and building trust. Employee engagement is more likely to boost productivity than surveilling, and more importantly, in today’s climate, has been shown to increase employee retention. Ultimately, under current U.S. law, your employer can surveil you to its heart’s content in most states—but you can also resign if you feel your privacy rights have not been respected. As more and more in the labor force decide to do so, we’ll just have to wait and see how legislators respond.

Is Digital Automation the Key to a More Equitable and Efficient Justice System?

By: Abigael Diaz

Advancing technology is propelling the legal industry forward. According to a report by Legal Week Intelligence, 83% of legal professionals believe that technology will impact their work in the next five years. Private law firms are at the forefront of capitalizing on this technology and using digital automation to optimize resources, improve consistency, and increase transparency. Law firms are leveraging automation technology, either in-house or third-party, to streamline processes, increase efficiency, and maximize profits. There are two major ways automation is being used to improve processes: (1) making the legal intake process seamless to minimize legal triage and (2) increasing and improving self-service systems. 

If legal service providers had access to the same technology, they could use it to assist survivors of domestic violence to streamline their legal process. Alternatively, this technology could be used to help those about to be evicted when pandemic protections are lifted, working-class individuals traverse employment cases, or low-income families navigate family court. The possibilities to help those disserviced by the justice system are exponential. 

Legal service providers helping underserved populations are forced to triage who receives legal assistance and who does not because they are underfunded and lack resources. Some of the weight could be taken off the shoulders of legal service providers by using automation technology to streamline cases intake, limit triage, and allow for more lawyers’ time to be applied to substantive legal work. 

  1. Using Digital Automation to Improve the Intake Process and Minimize Triage. 

Private law firms use this automated technology at the intake and triage level to increase productivity and improve the services offered to users. The courts have used a caseflow management system based on case complexity, but triage becomes more necessary as legal aid increases and the court’s budgets are cut. Those who survive the intake process often have more money or time, can speak English, have the ability to persist, or can advocate for themselves. Richard Zorza, writing for Access to Justice, believes that it is impossible to give 100% justice access with a traditionally funded lawyer to everyone in our current system; thus, triage is a necessary feature for civil legal aids to be successful. 

Triage is a French word that means to sort or categorize. It is most recognizable as a word from emergency medical situations where hospitals sort their patients based on various factors, including the potential to survive, available resources, and current condition. Lawyers use triage to delegate work appropriately, deliver services, allocate resources, and ensure timely and cost-effective resolutions. The legal intake process is costly and requires patience, persistence, and a keen eye for detail. Law firms use digital automation to optimize the legal intake process to relieve lawyers of “low value and monotonous tasks,” allowing lawyers to focus on cognitive and strategic work. 

Triage is inevitable as soon as one person cannot receive adequate legal assistance.  When there is an increased demand for legal services, marginalized individuals lose out on the traditional attorney-client relationship. The need for triage can be limited by expediting and automating the intake process. Especially because in the current system, if a legal service provider chooses to give one client the full traditional services, the act would also deny services to another person in the system.

  1. Digital Automation Can be Used to Improve Self-Service Options to Navigate Legal Procedures. 

Another way digital automation technology can be utilized is by improving self-service. Law firms are using this concept to increase services to clients without increasing output from lawyers. Self-service is typically used to help draft legal documents and give general legal advice. Marginalized folks are already limited to pro se self-representation if they cannot afford or have access to an attorney. Pro se is when someone represents themselves in court because they could not or chose not to retain counsel. So, what if the same technology being used to create optimal self-service experiences at the top was used to assist those without an abundance of legal resources to become educated and properly complete their necessary legal documents. 

If the legislature could make automated resources accessible to all, it would positively impact the court system’s cost and time efficiency while actively increasing justice. This may cause an immediate influx of cases because more people will be empowered to seek justice through the legal system, but it will also make the courts more efficient as there will be less human error. An automated system could ensure clients are better-informed  about the legal system and its procedures. More folks could be enabled to represent themselves and have the necessary knowledge to approach their particular legal situation. 

Those most vulnerable in our society are being left up to legal service triage systems that decide whether they get access to legal assistance or not. The technology to assist with legal documentation, filling out forms, being aware of traditionally relevant policies, legal templates for contracts, and other documents that could be automated, already exists. It is about capturing that technology and making it accessible to those who need it most. 

A community is only as strong as its most vulnerable members. As this technology advances, we as a society must share it with those who need it most. Automation can break down barriers for those who do not receive equitable access to the justice system.

Patents 101: Making Cents Off Ideas

By: Mark Stepanyuk

Patent Law and Section 101 Overview

The Patent Act was enacted pursuant to Article I, Section 8, Clause 8 of the Constitution, which allows for Congress “[t]o Promote the Progress of Science and useful Arts, by securing for limited Times to  . . .  Inventors the exclusive Right to their  . . .  Discoveries.” This utilitarian basis underpins the modern patent system as codified in Title 35 of the United States Code. Among other requirements, to secure a patent, the subject matter of the patent must be eligible under Section 101. The Patent Act lists subject matter eligibility for patentability as the first step in the patent process, and some have even argued that it would be inefficient not to apply the subject matter patentability screen first in assessing the patentability of an invention or discovery. 

35 U.S.C. Section 101 states that “[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” Congress intended for the eligible subject matter to “include anything under the sun that is made by man” (i.e., to be as broad as possible). Indeed, historically, the Supreme Court has concocted only three exceptions to this otherwise broad provision concerning subject matter patentability: laws of nature, physical phenomenon, and abstract ideas. 

Behind this subject matter patentability screen is the basic assumption that granting a patent on these relatively ineffable concepts would ultimately not “[p]romote the Progress of Science and useful Arts.” That is, since part of the patent bargain between an inventor and society includes the grant of a 20-year monopoly (from the date of filing), if that patent was given to an inventor for any of these conceptual exceptions, society would be getting the short end of the stick in the exchange. In Funk Brothers Seed Co., the United States Supreme Court uses fancy language to describe these concepts as “part of the storehouse of knowledge of all men” and “free to all men and reserved exclusively to none,” but functionally, the worry is one of pre-emption. As echoed by the Court on many occasions, the fundamental concern is inhibiting future innovation by “improperly tying up the future use of laws of nature,” and this reasoning is consistent with the utilitarian framework of the constitutional provision underpinning the patent system in the first place.

Section 101 and its Ambiguity

Since the dawn of the software and biotech age, it has become more difficult for courts to distinguish between patentable and unpatentable subject matter under section 101. Although courts have consistently struggled to assess the risk of preemption directly or indirectly, that task has become especially tricky for relatively novel, emerging, and dynamic industries such as software and biotechnology. From Mayo and Alice, the Supreme Court has devised a two-step test to determine patent subject matter eligibility under 35 U.S.C. § 101: the court determines (1) whether the claims at issue are directed to one of those patent-ineligible concepts; and if so, the court asks (2) what else is there in the claims? To answer that, the court considers elements of each claim both individually and “as an ordered combination” to determine whether the additional elements “transform the nature of the claim” into a patent-eligible application. In Alice, the court said that this second step amounts to a search for an “inventive concept,” and a court commonly ascertains an inventive concept by asking whether the step was “well-understood, routine, and conventional to a skilled artisan.” Berkheimer clarified that although patent eligibility is a question of law, whether the inventive concept is “well-understood, routine, and conventional to a skilled artisan” is a question of fact, leading to less invalidation of patents in early stages of litigation. As it stands, this Alice has proven to be quite confusing. 

What does it mean for a claim to be directed to a patent-ineligible idea? What exactly constitutes an inventive step? Nobody knows. The current state of section 101 jurisprudence is highly unpredictable and the main determinant for patent eligibility in this area seems to be the claim drafting skills of the prosecutor and the skills of the litigator in the courtroom. Courts have noted that since essentially every routinely patent-eligible invention of physical products and actions involve, in various degrees, some law of nature, natural phenomena, or abstract idea, it’s difficult to draw the line as to when that claim amounts to nothing more than ineligible subject matter. Some courts have dealt with this by considering the claims as a whole and asking whether their character is directed to the excludable subject matter. Again, this is an evolving area of law with no clear answers. In fulfilling patent law’s constitutional utilitarian imperative, courts will likely think about the field’s relative novelty and dynamism, the effect of granting the patent on market entry by competitors, invention and discovery costs borne by the patentee, whether the claims are directed to a genus or species, etc., all in an attempt to gauge the relative impact of preemption. 

The Patent Law System and the Future of Section 101

In the United States, the law is a disjointed field of outcomes and approaches, and its patent system is no different. Institutions playing a role in the U.S. patent system also shape section 101 judicial value judgments.  The Supreme Court of the United States (which generally has the final say on patent cases), the United States Court of Appeals for the Federal Circuit (established in 1982 and operated as an appellate-level court for patent cases), the United States Patent and Trademark Office (which usually operates as the first system to interface with patents), and district courts (which operate as the most common venues for resolving patent disputes) all leave indelible marks on the law of patents in the U.S. In interpreting rules such as section 101, these institutions do not necessarily work with the same set of interests; indeed, the political economy of operational processes (such as internal docket management), personnel’s relative expertise, the institution’s stated objective, and other functional mechanics, create a different set of incentives in approaching patents and disputes. Additionally, Congress tends to exist as a wild card player that can speak at any point to clarify an approach to interpreting section 101 of the Patent Act.

Whatever the reason for the current state of section 101 jurisprudence, many want some clarity–including the Federal Circuit. Section 101 litigation has drastically increased since the Alice ruling, and it looks like there is no end in sight. But there may be some hope! Currently, there is a case pending certiorari with the Supreme Court that involves a method for manufacturing driveshafts to reduce interior cabin vibration in vehicles. If granted cert. by the Supreme Court, this case could provide clarity on important questions like what is the appropriate standard for determining whether a patent claim is “directed to” a patent-ineligible concept? Although this clarification has some potential to help future courts make sense of which ideas are patent-eligible, it would also not be inconceivable for some other version of Alice to eventually come along and shake things up all over again in this dynamic field of law.