SAN FRANCISCO (CN) – Vintage gaming company Atari has settled a lawsuit accusing Swiss foods giant Nestle of using one of its classic video games to sell Kit Kat bars to nostalgic gamers without permission.
Atari sued Nestle in August last year for featuring its 1975 game “Breakout” in video and social media ads targeting “nostalgic Baby Boomers, Generation X, and even today’s millennial and post-millennial gamers.”
“Breakout,” a follow-up to Atari’s hit game “Pong,” was created by “two little known but up-and-coming developers,” Steve Jobs and Steve Wozniac, who went on to co-found Apple.
On Wednesday, U.S. District Judge Yvonne Gonzalez Rogers approved Atari’s request to voluntarily dismiss the case with prejudice.
Both parties reached a settlement during a conference in Magistrate Judge Sallie Kim’s courtroom on Dec. 12, 2017, according to court records. The terms of the agreement are confidential.
Atari had accused the Swiss foods giant of copyright and trademark infringement and dilution, false designation of origin and unfair competition.
The video ad produced by Nestle shows a diverse group of people playing what looks like “Breakout,” but instead of breaking bricks, a tiny spherical graphic smashes into Kit Kat bars. The name of the ad, featured on the video-hosting website Vimeo, is “Kit Kat: Breakout.”
“The use of the term ‘Breakout’ – one word – in this context is the plainest invasion and infringement of Atari’s trademark rights,” Atari’s 39-page complaint stated.
Atari said it first discovered the ad campaign in October 2016 and promptly sent a cease-and-desist letter.
Nestle had argued the legal spat belonged in a British court because the ad campaign was launched in the United Kingdom.
Atari was seeking treble and punitive damages, along with a permanent injunction barring Nestle from using “Breakout” in its marketing and advertising.
Attorneys for both sides did not immediately return emails and phone calls seeking comment Wednesday afternoon.
Atari is represented by Keith Wesley of Brown George Ross in Los Angeles. Nestle is represented by A. John P. Mancini of Mayer Brown in New York.
Last week, Nestle announced it would sell its U.S. candy business to Ferrero SpA, an Italy-based company that makes Nutella, for $2.8 billion.
Nestle will continue to sell Kit Kat globally, except for in the U.S., where Hershey Co. owns the rights, according to Bloomberg.
“Nestlé remains fully committed to growing its leading international confectionery activities around the world, particularly its global brand KitKat,” the company said in its Jan. 16 announcement.
Valued at $229.5 billion as of May 2017, Switzerland-based Nestle is the world’s largest food and beverage company, with annual revenue of $90.8 billion, according to Forbes.