Give Me a Break: Atari Sues Nestle Over Kit Kat Ads

SAN FRANCISCO (CN) — Atari sued Nestle on Thursday, claiming the candy giant abused its 1970s “Breakout” video game — created by Steve Jobs and Steve Wozniak — to sell Kit Kat bars to nostalgic Baby Boomers and other gamers.

Jobs and Wozniak, “two little known but up-and-coming developers,” created “Breakout” in 1975, to follow up Atari’s smash hit “Pong,” according to the federal lawsuit. Jobs and “the Woz” went on to found Apple computer.

“Forty years later Nestle decided that it would, without Atari’s authorization, leverage ‘Breakout’ and the special place it holds among nostalgic Baby Boomers, Generation X, and even today’s millennial and post-millennial ‘gamers’ in order to maximize the reach of worldwide, multi-platform advertisements for Nestlé Kit Kat bars,” Atari says in its complaint of copyright and trademark infringement and dilution, false designation and unfair competition.

Nestle produced a video ad that 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,” the complaint states.

Nestle also posted ads featuring the game on Facebook and Twitter, inviting users to “Get your game on Breakout Breakers,” according to screenshots attached as exhibits to the complaint.

Atari says it discovered the “infringing” ad campaign in October 2016 and promptly sent a cease-and-desist letter. Nestlé’s attorney responded in November, denying wrongdoing and saying the dispute is subject to the laws of the United Kingdom because that’s where the ad was launched.

Atari calls that argument “frivolous.”

“This argument is frivolous given, among other things, the ads’ reach into the United States, the protection afforded to Atari’s IP [intellectual property] by federal law, and the absence of any contract between Nestle and Atari containing a choice of law provision naming UK law as governing,” Atari says in the complaint.

It says “Breakout” is a key component of its licensing portfolio, and that it has earned “substantial revenue” licensing “Breakout” to major corporations.

Atari adds that it defies reason that a global business such as Nestle would be unaware of its duty to properly license intellectual property used in its international ad campaigns.

“As had to have been obvious to a global behemoth whose business depends on the sophisticated, comprehensive marketing of a wide swath of consumer goods, Nestle’s heist of Atari’s intellectual property rights in ‘Breakout’ violates several provisions of law,” the complaint states.

In an email, a Nestle representative said: “This is a U.K. TV advert that ran in 2016. The ad no longer runs and we have no current plans to re-run it. We are aware of the lawsuit in the U.S. and will defend ourselves strongly against these allegations.”

Atari seeks treble and punitive damages and a permanent injunction barring Nestle from using the “Breakout” game in its marketing and advertising.

It is represented by Keith Wesley with Browne George Ross in Los Angeles.

Valued at $229.5 billion in May this year, Switzerland-based Nestle is the world’s largest food and beverage company, with annual revenue of $90.8 billion, according to Forbes.

%d bloggers like this: