MUSI INC., Plaintiff, v. APPLE INC., Defendant.
Case No. 24-cv-06920-EKL
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA
January 30, 2025
Re: Dkt. No. 10
This action arises out of Defendant Apple Inc.’s decision to remove Plaintiff’s music streaming application (the “Musi app“) from the App Store following complaints that the Musi app violates third-party intellectual property rights. Before the Court is Plaintiff’s motion for a preliminary injunction that would require Apple to continue offering the Musi app for download through the App Store. See Mot. for Prelim. Inj., ECF No. 10 (“Motion“). The Court reviewed the briefs and supporting exhibits and heard argument on January 9, 2025. At the conclusion of the hearing, the Court denied the Motion, noting that a written order would follow. Min. Entry, ECF No. 37. This Order provides the reasons for the Court’s ruling.
I. BACKGROUND
A. The Musi app and the App Store
Plaintiff Musi Inc. (“Musi“) is “the developer, owner, and operator of the Musi app,” a music streaming application that draws from “publicly available content on YouTube’s website.” Compl. ¶ 2, ECF No. 1. The Musi app was offered for download through the App Store for years until it was removed on September 24, 2024. See id.
The App Store is an electronic store operated by Apple through which developers can offer a wide variety of applications for Apple device users to download. See Apple Developer Program
Apple benefits from the growth of the App Store ecosystem “directly through App Store commissions” and “indirectly as the value users get from their iPhones increases.” Golinvеaux Decl. Ex. H at 8. Third-party developers like Musi benefit from the App Store, too, because it allows them to market and distribute their applications to millions of users. Apple calculated that, within the first decade of the App Store’s launch, developers “earned over $100 billion from the App Store.” Golinveaux Decl. Ex. G at 7, ECF No. 10-9. And in 2022, the App Store facilitated “$1.1 trillion in developer billings and sales” with “more than 90 percent of the billings and sales accruing solely to developers and businesses of all sizes.” Golinveaux Decl. Ex. J. at 2. Finally, and perhaps most important, users benefit from the growth of the App Store ecosystem because they can seamlessly download and use a wide variety of applications – including to stream music. Golinveaux Decl. Ex. H at 24-25 (noting that “many music streaming services” are available through the App Store).
The Musi app has been popular with users. “Musi has continuously been a top 200 app in the App Store for years.” Wojnowski Decl. ¶ 4, ECF No. 10-1. One report estimates that the Musi app has been downloaded “more than 66 million times since launching” and was downloaded 8.5 million times in 2023 alone. Milici Decl. Ex. 2 at 2, ECF No. 30-3. According to Musi, “Musi was gaining an average of 886,148 new users per month” in the four months before Apple removed the Musi app from the App Store. Wojnowski Reply Decl. ¶ 2, ECF No. 31-1.
Despite the popularity of the Musi app, not everyone is a fan. Indeed, Apple claims that it has received “over a dozen third-party complaints” regarding the Musi app, including complaints that the Musi app violates intellectual property rights. Evan-Karimian Decl. ¶¶ 3-4, ECF No. 30-8. The parties provided extensive documentary evidence regarding a complaint by the International Federation of the Phonographic Industry (the “IFPI“), so the Court focuses on that complaint here.
On July 27, 2024, the IFPI, which “promotes the interests” of “some 8,000 major and independent record companies in over 70 countries,” complained to Apple that the Musi app infringes its members’ intellectual property rights. Evаn-Karimian Decl. Ex. 1 at 6-7, 54-55, ECF No. 30-9 (“IFPI Dispute Email“). According to the IFPI, the Musi app reproduces and distributes IFPI members’ sound recordings and audiovisual works to the public without authorization. Id. at 54-55. Upon receiving the IFPI complaint, Apple forwarded it to Musi and instructed Musi to provide “written assurance that [the Musi app] does not infringe [the IFPI’s] rights, or that the parties are taking steps to promptly resolve the matter.” Id. at 56. Apple warned Musi that developers “with a history of allegations of repeat infringement . . . are at risk of termination from the Developer Program” and that “[f]ailure to respond to the [IFPI] or to take steps toward resolving a dispute may lead to removal of the aрp(s) at issue.” Id. at 59. In response, Musi called the IFPI’s claims “unsubstantiated,” but also represented that it would communicate directly with the IFPI “to attempt to come to a timely resolution of this dispute.” Id. at 51-52.
Months passed without progress. The IFPI periodically updated Apple that its complaint was not resolved because the Musi app “continues to infringe the rights of [its] member companies.” Id. at 22-24, 28-30. The IFPI also complained that Musi was “circumventing the technical protection measures (TPMs) which YouTube has implemented to protect IFPI Member Content.” Id. at 22-24. The IFPI implored Apple repeatedly to remove the Musi app from the App Store to address the alleged infringement. See, e.g., id. at 2, 8, 12, 18-19, 24, 35. Musi maintained its position that the IFPI complaint was “without merit.” Id. at 20-21.
On April 15, 2024, the IFPI’s correspondence with Apple shifted to a more adversarial tone. The IFPI argued that, based on the evidence it had provided, “Apple has the requisite knowledge of [Musi’s] illegal activity as referred to in Article 6 of the EU Digital Services Act” – implying that the IFPI could hold Apple liable under EU law for Musi’s alleged infringement. See id. at 6-8. After receiving this implied threat of legal action, Apple told Musi that if “the matter is not resolved shortly, Apple may be forced to pull your application(s) from the App Store.” Id. at 5. Yet Musi maintained its position that the Musi app does not infringe IFPI members’ rights and does nоt breach YouTube’s terms of service. Id. at 4.
Apparently, Musi never resolved the IFPI’s complaint. The last communication in the record is a May 7, 2024, letter from the IFPI to Musi stating: “It is clear that we have reached an impasse in correspondence.” Evan-Karimian Decl. Ex. 5 at 1, ECF No. 30-13.
C. YouTube’s Complaint and Apple’s Removal of the Musi app
Musi has also received complaints from YouTube, and the two companies have “engaged in sporadic conversations” since 2015. Wojnowski Decl. ¶ 6. From Musi’s perspective, “Musi has repeatedly expressed its commitment to offer the Musi app in a way that complies with YouTube’s Terms of Service.” Id. When YouTube raised concerns, in some cases, Musi “adjusted the app’s functionality.” Id. ¶ 7. But in recent years, Musi has elected not to modify the Musi app, and instead maintains that the Musi app fully complies with YouTube’s terms. See id.
In April 2021, YouTube’s outside counsel wrote to Musi, claiming that the Musi app violated YouTube’s terms by: (1) accessing and using YouTube’s non-public interfaces, (2) using
On March 22, 2023, YouTube again complained to Apple that the Musi app violated YouTube’s terms of service. Id. ¶ 3; Compl. Ex. C at 6, ECF No. 1-3. Musi claims that it “promptly responded” to YouTube’s complaint, and that YouTube never replied. Elkin Decl. ¶ 3; see also Compl. Ex. C at 2-5.
On July 15, 2024, Apple had a phone call with YouTube, including in-house counsel from both companies, “to follow up on earlier complaints YouTube itself had submitted regarding the Musi app.”1 Evan-Karimian Decl. ¶ 7. “During this phone call, YouTube confirmed its position that the Musi app violates YouTube’s Terms of Service, including by misusing YouTube’s Application Programming Interface (“API“). YouTube also requested the removal of the Musi app from App Store.”2
On August 8, 2024, Apple notified Musi that it received a complaint from YouTube on July 29, 2024, alleging that the Musi app infringes YouTube’s intellectual property rights and violates its terms of service. Elkin Decl. Ex. A, ECF No. 10-17. On August 12, 2024, Musi told Apple that it has “been in communication directly with [YouTube] on this matter in order to
On August 14, 2024, Apple instructed Musi again to “contact YouTube Legal immediately regarding this issue.” Elkin Decl. Ex. B at 2. But Musi did not contact YouTube despite Apple’s insistence. See Hr’g Tr. 15:12-16:2. On September 6, 2024, YouTube wrote to Apple: “Musi has not reached out to us . . . and [the Musi] app continues to violate our Terms of Service. We request that you please proceed with removing [the Musi] app from the App Store.” Elkin Decl. Ex. B at 2. Finally, after receiving this email, Musi contacted YouTube directly on September 6, 2024, and repeatеd its position that the Musi app complies with YouTube’s terms. Elkin Decl. Ex. C at 1, ECF No. 10-19.
On September 11, 2024, the National Music Publishers Association (the “NMPA“) wrote to Apple that it “strongly supports YouTube’s complaint against Musi” and asked Apple to remove the Musi app from the App Store “expeditiously.” Evan-Karimian Decl. Ex. 6 at 2, ECF No. 30-14. The NMPA explained that the Musi app “offers an alternative user interface for accessing the entire YouTube video library, except with ads served by Musi rather than YouTube,” and that “this ad manipulation serves to undermine NMPA members’ various YouTube licensing structures.” Id. at 1. NMPA members license their works to YouTube and “generate royalties according to a statutory formulа tied to [YouTube’s] revenue.” Id. at 2. Thus, “by muting YouTube’s ads and replacing them with its own, Musi diverts royalties from music publishers and songwriters to itself.” Id. The NMPA letter also included analysis of Musi’s code to demonstrate how “Musi lays its own ads over YouTube’s ads.” Id. at 4.3
Musi initiated this action on October 2, 2024, claiming that Apple’s decision to remove the Musi app from the App Store violated the DPLA and the implied covenant of good faith and fair dealing. On October 9, 2024, Musi filed a motion for a preliminary injunction to prevent Apple “from refusing to list or otherwise making unavailable the Musi app from the App Store.” Proposed Order аt 2, ECF No. 10-22. After briefing concluded, the Court heard argument on January 9, 2025. At the hearing, Musi acknowledged that it has not made any attempt to resolve YouTube’s complaints, and has not communicated with YouTube, since September 6, 2024. Hr’g Tr. 18:6-13.
II. LEGAL STANDARD
“A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). “In each case, courts ‘must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief.’” Id. (quoting Amoco Prod. Co. v. Gambell, 480 U.S. 531, 542 (1987)). “A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, аnd that an injunction is in the public interest.” Id. at 20.
Under the Ninth Circuit’s “sliding scale approach,” a preliminary injunction may issue where “serious questions going to the merits were raised and the balance of hardships tips sharply
III. DISCUSSION
The crux of Musi’s complaint is that Apple breached the Apple Developer Program License Agreement and the implied covenant of good faith and fair dealing whеn it removed the Musi app from the App Store. Musi seeks a preliminary injunction that would prevent Apple “from refusing to list or otherwise making unavailable the Musi app from the App Store.”4 Proposed Order at 2.
The Court assumes, without deciding, that Musi seeks a prohibitory injunction rather than a mandatory one. Even with this assumption, Musi’s request for a preliminary injunction must be denied because Musi fails to demonstrate serious questions going to the merits of its claims, let alone a likelihood of success on the merits. The DPLA, which governs the terms of Musi’s use of the App Store, affords Apple broad discretion to remove applications “at any time, with or without cause.” DPLA Schedule 1 § 6.3. Furthermore, on the current reсord, Musi has not raised serious questions that Apple acted unreasonably or in bad faith when it removed the Musi app after receiving several third-party complaints that went unresolved for months. Finally, Musi has also failed to show that its requested injunction would serve the public interest.
1. Breach of Contract
Musi’s breach of contract claim requires “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” Oasis W. Realty LLC v. Goldman, 51 Cal. 4th 811, 821 (2011). A contract must be interpreted “to give effect to the mutual intention of the parties as it existed at the time of cоntracting.”
As a condition of using Apple software and accessing the App Store platform, all third-party application developers, including Musi, agree to the DPLA. Relevant here, Musi agreed that the Musi app “will not violate, misappropriate, or infringe any Apple or third-party copyrights, trademarks, rights of privacy and publicity, trade secrets, patents, or other proprietary or legal rights.” DPLA at 17. The DPLA includes the following termination clause:
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 6.3, You acknowledge 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 laws, that: (i) those Licensed Applications are not authorized for export to one or more of the regions designated by You under Section 2.1 hereof, in accordance with the Export Administration Regulations or other restrictions; (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; (iii) the distribution and/or use of those Licensed Applications violates any applicable law in any region You designate under Section 2.1 of this Schedule 1; (iv) You have violated the terms of the Agreement, this Schedule 1, or other documentation including without limitation the App Review Guidelines; or (v) You or anyone representing You or Your company are subject to sanctions of any region in which Apple operates. An election by Apple to cease allowing download of any Licensed Applications, pursuant to this Section 6.3, shall not relieve You of Your obligations under this Schedule 1.
DPLA Schedule 1 § 6.3 (emphasis added).
Musi contends that more was required of Apple. Musi points to other language in the DPLA, which provides that “Apple may cease allowing download by end-users . . . if Apple reasonably believes, based [on] human and/or systematic review,” that an application infringes intellectual property rights. DPLA Schedule 1 § 6.3 (emphasis added). Musi proposes that this “reasonable belief” clause limits Apple’s right to cease offering an application “at any time, with or without cause.” According to Musi, Apрle was required to (1) conduct a “human and/or systematic review” of YouTube’s complaint, and (2) based on that review, form a reasonable belief that the Musi app infringed intellectual property rights. Mot. at 14-15.5
The problem with Musi’s construction of the DPLA is that the “reasonable belief” clause expressly does not “limit[] the generality” of Apple’s right to cease offering an application “at any time, with or without cause.” DPLA Schedule 1 § 6.3. When a contract’s plain language expressly states that a clause is not limiting, a court should not construe the clause as a limitation. See FTC v. EDebitPay, LLC, 695 F.3d 938, 943 (9th Cir. 2012) (holding that the phrase “including but not limited to” is a “phrase of enlargement” indicating that “enumerаted examples following the phrase should not be construed as an exhaustive listing“). Moreover, Musi’s proposed
Judge Cousins’ opinion in Intango, Ltd. v. Mozilla Corp. is instructive. No. 20-cv-02688-NC, 2020 WL 12584274 (N.D. Cal. Aug. 25, 2020). In that case, the plaintiff made add-ons for Mozilla’s Firefox browser. Mozilla disabled the plaintiff’s add-ons because they allegedly violated Mozilla’s distribution agreement by “secretly redirecting its users’ internet searches and tracking its users’ search activity.” Id. at *1. Mozilla’s distribution agreement provided that:
Mozilla reserves the right (though not the obligation) to, in [Mozilla’s] sole discretion, remove or revoke access to any Listed or Unlisted Add-ons. This applies, but is not limited to, Add-ons that, in [Mozilla’s] reasonable opinion, violate this Agreement or the law, any аpplicable Mozilla policy, or is in any way harmful or objectionable. In addition, [Mozilla] may at any time remove Your Add-on from AMO; revoke Your Mozilla Certificate; blocklist an Add-on; delete your AMO account; flag, filter, modify related materials (including but not limited to descriptions, screenshots, or metadata); reclassify the Add-on; or take other corrective action.
Id. at *6 (emphasis added). This language, including the provision that Mozilla “may at any time remove” add-ons, gave Mozilla broad discretion to remove the plaintiff’s add-on. Judge Cousins held that Mozilla’s right to remove add-ons was expressly “‘not limited to’ situations where Mozilla found that the add-on violates Mozilla policy.” Id. The same is true here. The DPLA provides examрle circumstances under which Apple may cease offering an application, and those examples do not limit the broad discretion that Apple reserved for itself.6
Musi cites cases that are inapposite or affirmatively unhelpful to its argument. For example, in Marder v. Lopez, the plaintiff argued for a narrow construction of a settlement release provision by pointing to examples of claims that she had released. 450 F.3d 445, 451 (9th Cir. 2006). The Ninth Circuit rejected the narrow construction because the settlement listed the examples “[w]ithout limiting the generality” of the release. Id. at 451-52.
Additionally, Musi has not raised serious questions going to the merits of its breach of contract claim even under Musi’s own construction of the DPLA. Under Musi’s construction, Apple was required to form a reasonable belief that the Musi app infringes third-party intellectual property rights. As recounted above, from July 27, 2023, through at least May 7, 2024, Apple received repeated complaints of infringement from the IFPI. See generally IFPI Dispute Email. The IFPI substantiated its complaint with purported evidence of infringement, IFPI Dispute Email at 11-12, and threatened that Apple could be liаble for Musi’s conduct. Yet Musi did not resolve the IFPI complaints.
Musi did not resolve YouTube’s complaint, either. The heart of YouTube’s complaint is that Musi sells its own advertising for display on the Musi app that replaces YouTube’s advertising, even though Musi app users are streaming content from YouTube. See Compl. ¶ 32; see also Elkin Decl. ¶ 2. Musi does not deny the factual basis of YouTube’s complaint.7 Instead,
To be clear, the Court is not deciding, and has not been asked to decide, the merits of any third-party complaint against Musi. The relevant question, under Musi’s construction of the DPLA, is whether Apple formed a reasonable belief that the Musi app was infringing third-party intellectual property rights. At this stage, the record reflects that Apple received multiple complaints about the Musi app from different third parties. These complaints were supported by some evidence, and they went unresolved for months. The record also reflects that Musi’s responses were not always diligent, and they did not assure Apple that Musi was making progress to resolve the complaints of infringement. On the current record, Musi has not raised a serious question that Apple’s decision to remove the Musi app due to alleged infringement was unreasonable.
2. Breach of the Implied Covenant of Good Faith and Fair Dealing
Musi also claims that Apple violated the covenant of good faith and fair dealing. “[B]reach of a specific provision of [a] contract is not a necessary prerequisite” for a claim alleging violation of the covenant of good faith and fair dealing. Carma Devs. (Cal.), Inc. v. Marathon Dev. Cal., Inc., 2 Cal. 4th 342, 373 (1992) (in bank). However, “the scope of conduct prohibited by the covenant of good faith is circumscribed by the purposes and express terms of the contract.” Id. Therefore, the implied covenant cannot require action that contradicts the rights and obligations set forth by a contract’s express terms. The Supreme Court of California has observed: “We are aware of no reported case in which a court has held the covenant of good faith may be read to prohibit a party from doing that which is expressly permitted by an agreement. On the contrary, as a general matter, implied terms should never be read to vary express terms.” Id. at 373-74; see also Song fi Inc. v. Google, Inc., 108 F. Supp. 3d 876, 885 (N.D. Cal. 2015) (“Plaintiffs cannot state a claim for breach of the implied covenant of good faith and fair dealing, because ‘if defendants were given the right to do what they did by the express provisions of the contract there can be no breach.’” (quoting Carma, 2 Cal. 4th at 374)).
Musi has not raised a serious question or shown a likelihood of success on its claim that Apple acted in bad faith. Based on the plain language of the DPLA, Apple had the express right to remove the Musi app from the App Store “at any time, with or without cause.” DPLA Schedule 1 § 6.3. The covenant of good faith and fair dealing cannot impose an obligation on Apple that contradicts this express term. Carma, 2 Cal. 4th at 373-74; see also Intango, 2020 WL 12584274, at *7 (holding that a claim for beach of the implied covenant was “precluded by the specific terms” of the agreement, which permitted defendant to remove plaintiff’s browser add-ons “at any time“).
Additionally, Musi’s complaints of bad faith are not supported by the current record. Musi says that Apple “never explained the bases for” YouTube’s complaint, Mot. at 15, but Musi was well aware of the bases for the complaints against it. When Apple notified Musi of the complaint in August 2024, Musi responded that it has “been in communication directly with [YouTube] on this matter.” Elkin Decl. Ex. B at 3. Musi was referring to its prior correspondence with YouTube in 2021 regarding the same YouTube сomplaints, which Musi disputed. Musi complains that “Apple inserted itself into the dispute as arbiter and then had discussions with only one side.” Reply at 8. Although Apple did not disclose that it had a call with YouTube or received a letter from the NMPA, these developments did not raise new bases for removing the Musi app. During the phone call, YouTube “confirmed” the position it raised in prior complaints. Evan-Karimian Decl. ¶ 7. And the NMPA letter provided purported evidence to support YouTube’s familiar complaint that Musi replaces YouTube advertising with its own, to the alleged detriment of copyright owners who license their works to be displayed via YouTube.
Musi relies on two primary cases to support its position that Apple acted in bad faith by abusing its discretion. See InfoStream Grp., Inc. v. PayPal, Inc., No. C 12-748 SI, 2012 WL 3731517 (N.D. Cal. Aug. 28, 2012); Campbell v. eBay, Inc., No. 13-CV-2632 YGR, 2014 WL 3950671 (N.D. Cal. Aug. 11, 2014).8 These cases held only that the plaintiffs plausibly alleged a breach of the implied covenant, but Musi must show more than a plausible claim to obtain the extraordinary remedy of a preliminary injunction. Where Do We Go Berkeley, 32 F.4th at 863.
Because Musi has failed to show serious questions going to the merits, let alone a likelihood of success, the Court need not reach the other Winter elements. Bennett v. Isagenix Int’l LLC, 118 F.4th 1120, 1126 (9th Cir. 2024) (“[I]f a movant fails to meet the threshold inquiry of likelihood of success on the merits (or serious questions going to them), a court may decide to deny a preliminary injunction without considering the other factors.“); see also Disney Enters., Inc. v. VidAngel, Inc., 869 F.3d 848, 856 (9th Cir. 2017) (“Likеlihood of success on the merits ‘is the most important’ Winter factor; if a movant fails to meet this ‘threshold inquiry,’ the court need not consider the other factors” in the absence of “serious questions going to the merits.” (quoting Garcia v. Google, Inc., 786 F.3d 733, 740 (9th Cir. 2015))). However, the Court will also address whether Musi’s proposed injunction is in the public interest.
B. The Public Interest
“[T]he public interest inquiry primarily addresses impact on non-parties rather than parties.” hiQLabs, Inc. v. LinkedIn Corp., 31 F.4th 1180, 1202 (9th Cir. 2022) (quoting Bernhardt v. Los Angeles Cnty., 339 F.3d 920, 931-32 (9th Cir. 2003)). Here, the Court considers the public interest element because the impact of Musi’s requested injunction would reach “beyond the parties, carrying with it a potential for public consequences.” Stormans, Inc. v. Selecky, 586 F.3d 1109, 1139 (9th Cir. 2009).
Musi’s requested preliminary injunction would prohibit Apple “from refusing to list or otherwise making unаvailable the Musi app from the App Store.” Proposed Order at 2. The practical effect of this injunction, if entered, would be to compel Apple to continue to offer the Musi app for download by potentially millions of new users before the merits of Musi’s claims are decided. See Wojnowski Reply Decl. ¶ 2 (discussing the Musi app’s average new user growth
Musi has not presented any compelling public interest to counterbalance the potential violation of third-party intellectual property rights. Musi argues that “Apple’s conduct implicates nearly 2 million third-party iOS developers,” Mot. at 12-13, but there is no evidence in the record of any misconduct by Apple with respect to any iOS developer. Moreover, Musi’s proposed injunction would require Apple to reinstate the Musi app; it would not confer any benefit on any developer other than Musi. Accordingly, the Court finds that a preliminary injunction is not in the public interest.
IV. CONCLUSION
For the foregoing reasons, Musi is not entitled to the extraordinary remedy of a preliminary injunction. Musi’s Motion is DENIED without prejudice to renewal. In reaching this conclusion, the Court does not express any opinion on the merits of third-party complaints against Musi, which are not before the Court. The Court also does not address whether Musi could plausibly state a claim against Apple, as that question is appropriately reserved for Apple’s forthcoming motion to dismiss Musi’s amended complaint.
IT IS SO ORDERED.
Dated: January 30, 2025
Eumi K. Lee
United States District Judge