Atari Gets The Settlement It Was Surely Fishing For Over An Homage To 'Breakout' In KitKat Commercial

from the gaming-the-system dept

As readers of this site will know, once-venerated gaming giant Atari long ago reduced itself to an intellectual property troll mostly seeking to siphon money away from companies that actually produce things. The fall of one of gamings historical players is both disappointing and sad, given just how much love and nostalgia there is for its classic games. It was just that nostalgia that likely led Nestle to craft an advertisement in Europe encouraging buyers of candy to "breakout" KitKats and included imagery of the candy replacing a simulation of a game of Breakout. For this, Atari sued over both trademark and copyright infringement, stating for the latter claim that the video reproduction of a mock-game that kind of looks like Breakout constituted copyright infringement.

As we discussed in that original post, both claims are patently absurd. Nestle and Atari are not competitors and anyone with a working frontal lobe will understand that the ad was a mere homage to a classic game made decades ago. If the products aren't competing, and if there is no real potential for public confusion, there is not trademark infringement. As for the copyright claim, the expression in the homage was markedly different from Atari's original game, and there's that little fact that Nestle didn't actually make a game to begin with. They mocked up a video. Nothing in there is copyright infringement.

It was enough that I'm certain some of our readers wondered why Atari would do something like this to begin with. The answer is the recent news that a settlement has been reached in the lawsuit, and it was almost certainly that settlement that Atari was fishing for all along.

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. 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.

So, while we don't know the terms of the settlement, it's incredibly common for megaliths like Nestle to throw settlement money at pests like Atari to make them go away. The settlements are often not anything like the potential rewards for the plaintiff if the case had gone to trial, but that's entirely besides the point. The point is to get the settlement. It's essentially free money, after all, reliably gained by filing lawsuits trolling successful companies with spurious legal claims that at best skirt the line of what intellectual property laws actually say.

It's for that reason that trolls like Atari seek treble and punitive damages in these suits, merely as a way to alter the risk calculation for the legal teams of their victims. A company like Nestle, worth hundreds of billions of dollars, has easy math to do when it comes to deciding how to make this all go away. The problem with this is, of course, that not every company has billions of dollars of revenue coming in. It's the smaller companies that are truly victimized by IP trolls that fill their war chests with these kinds of easy settlements.

Filed Under: candy, kitkat, trademark, trolling, video games
Companies: atari, nestle

Atari Sues Nestle Over A KitKat Commercial With An Homage To 'Breakout'

from the gimme-a-break dept

A few decades ago, Atari was one of the few indisputable titans in the the early gaming industry. With early titles like Pong and Breakout, Atari became a household name for gamers. At the present, however, Atari is little more than an intellectual property troll, scouring the world for anything it might frame as copyright or trademark infringement, often to laughable lengths. For the rest of this post, it is important to keep in your mind the fact that this is now Atari's chief industry: licensing and lawsuits.

In 2016, Nestle unveiled a new commercial for its KitKat candy. That commercial, entitled "Breakout", can't currently be shown as it appears it's no longer available on YouTube or Vimeo. It's unclear who is responsible for the commercial no longer appearing on those sites, but it's certainly clear that they were taken down in relation to a lawsuit filed by Atari against Nestle for both trademark and copyright infringement around the video.

In a complaint filed on Thursday in federal court in San Francisco, Atari said Nestle knowingly exploited the “Breakout” name, look and feel through social media and a video, hoping to leverage “the special place it holds among nostalgic Baby Boomers, Generation X, and even today’s Millennial and post-Millennial ’gamers.’”

The commercial did this by encouraging customers to "breakout" and eat KitKat bars, while replacing all of the iconic imagery from the original game Breakout with Nestle imagery, such as replacing the blocks in the game with KitKat bars. For these sins, the lawsuit filed by Atari claims both that customers could be confused into thinking there was some association between the two companies and that the imagery Nestle used in the commercial constituted copyright infringement on the original game. Both claims stretch this writer's credulity quite thin.

On the trademark claim, Atari goes to some lengths to detail the history of the game and the vaunted status the company once held in the industry. In doing this, it notes that it has held trademarks on varieties of the term Breakout for nearly forty years. The problem is that all of these trademarks are for goods and services that have nothing to do with the food or confection industries. To get around that, Atari itself admits it isn't really in the gaming business any longer, but rather in the licensing business. So, by using the term "breakout" in its ad campaign, Atari claims it has been harmed by Nestle's use of the term in that it wasn't allowed to license that term to the very same Nestle.

Atari’s IP licensing activities are responsible for a significant portion of its annual revenues. Revenues from its best-known games make up a significant portion of those revenues. Without the benefit of its licensing revenues, profits of Atari would be significantly lower. As an initial, straightforward matter, Nestlé has denied Atari the licensing fees it would have charged Nestlé for use of Atari’s intellectual property in the widely distributed KIT KAT “Breakout” campaign, had Atari agreed to such use.

Sophistry in a trademark case? Gross. Nestle goes on to note that it has been harmed because now it won't have the opportunity to license other classic games like Asteroids and Centipede to the massive candy market. The problem is that this isn't how trademarks work. Certainly, had Nestle attempted to make an actual video game to market its KitKat bars and called it Breakout, Atari would have valid reason to go ballistic. This isn't what happened. Nestle made a commercial for candy. Atari does not sell candy, nor does it hold any trademarks for "breakout" for the candy industry.

On the copyright side, the claims are even more laughable.

In at least one video advertisement, Nestlé’s ad begins with four actors – two young, two middle-aged, in keeping with Breakout’s multi-generational appeal – sitting on a couch playing a video game. The game is revealed to be Breakout, with the nominal and insignificant difference between the classic version and Nestlé’s unauthorized version being that the long, rectangular bricks players “break” in the former are replaced with long, rectangular bricks made of KIT KAT chocolate bars in the latter.

Nestlé’s “Breakout” video advertisements depict imagery of the Breakout game which is covered and protected by Atari’s valid registered copyrights. The game simulation depicted in Nestlé’s video advertisement is substantially similar to the Breakout graphics covered by Atari’s valid registered copyrights.

Here again, Atari seems to be confused what its intellectual property rights actually protect it against. The copyright for Breakout covers its specific expression. By Atari's own admission, Nestle transformed that expression to serve as an homage to the game while relating it to KitKat bars. On top of that, Nestle did not make a video game. They simply created images that looked like one. Calling this copyright infringement is akin to the NFL suing Mars for its "Want to get away" Snickers commercial that showed an NFL referee in the middle of a football game as if Mars was putting on a football event. That would rightly be called crazy. Claiming copyright here is the same thing.

Too many lawsuits these days try to marry trademark and copyright infringement claims, trying to bolster one with the other. But this one from Atari is pretty special in its brave hilarity. Fortunately, Nestle is an organization with the resources to fight back against a once proud gamemaker that has since gone full on troll.

Filed Under: breakout, candy, kitkat, trademark, video games
Companies: atari, nestle