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.

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