Did Nestle’s recent advertising campaign for Kit Kat infringe the intellectual property rights of Atari?

According to the video game company, ads for Kit Kat used one of its first games, Breakout, to illegally promote the candy bar.

“In 1975, two little known but up-and-coming developers—Steve Jobs and Steve Wosniak—created Breakout for Atari,” according to the California complaint. “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 Nestle Kit Kat bars.”

For the advertising campaign, dubbed “Breakout,” Nestle replaced the game imagery—long, rectangular bricks that players “break”—with long, rectangular bricks made of Kit Kat chocolate bars. Some of the ads included comments such as “Is it time to break out of the Breakout?!”

Atari took particular offense at the alleged infringement not only because of the size of the campaign on Twitter, Facebook, Vimeo and YouTube, to name just a few social media sites, but also because the defendant, a major corporation well aware of intellectual property rights, infringed on more than one front.

“The use of the term ‘Breakout’—one word—in this context is the plainest invasion and infringement of Atari’s trademark rights,” the company alleged. “The use of the look, feel, sound, and operation of Breakout game screens is the plainest invasion and infringement of Atari’s trade dress and copyrights.”

Such across-the-board use of the Breakout IP inhibits Atari’s ability to license the material, the company added, and to generate income as the popularity of the game continues. Breakout has been downloaded more than 2 million times since it became available in the iTunes store in 2008.

The suit—which alleges trademark and copyright infringement as well as dilution, unfair competition and false designation of origin—seeks punitive damages and injunctive relief, as well as trebled monetary damages for willful and intentional violations of the Lanham Act.

To read the complaint in Atari Interactive, Inc. v. Nestle, click here.

Why it matters: Atari’s complaint attempted to foreclose any affirmative defenses raised by Nestle, by arguing that the advertising campaign made “significant, not fleeting” use of Atari’s IP; did not “meaningfully transform” the intellectual property of the video game company; and was not a parody of the game, “as it offers no critique or commentary on the Breakout game itself.” In a statement, Nestle said it was aware of the lawsuit and intends to “defend ourselves strongly against these allegations.”