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Game Over for Nestlé? Atari Sues Over “Breakout” Kit-Kat Ads

Posted in Advertising, Fair Use, Law Suits, Trademarks

For most of us, video games and candy go together perfectly, but that doesn’t mean they always get along. In fact, last week the “original” video game company, Atari Interactive, sued food and candy behemoth Nestlé in California federal court. What put Atari on tilt? It was Nestlé’s incorporation of the game play, layout, and namesake of Atari’s classic Breakout video game into a KitKat advertising campaign.

I’ll forgive those readers who are not well-versed in classic video games. Not everyone could be as interesting as I am, having built a vintage video game collection that included more than 700 games across the Intellivision, Atari 2600, NES (Nintendo), SNES (Super Nintendo), Sega Genesis, and other platforms—side note to self from 10 years ago, don’t fall for that “we need more space, you never play them, and wouldn’t you rather have money?” argument. Breakout was essentially a single player version of Pong, whose game play screen is shown in the image below:

Image courtesy of Atari Interactive, via its complaint.

If it isn’t obvious from the screenshot, the goal of the game is to eliminate all of the colored blocks in the wall at the top of the screen. The player moves the spaceship at the bottom to bounce back the bouncing ball until breaks all of the breaks in the wall. Once that happens, you move on to the next stage, where you do it again. Exciting, right?

Nestlé had the clever idea to create an advertising campaign based on the Breakout game where, instead of colored bricks, it used KitKat slabs (I believe that’s the culinary term for a KitKat portion). An example of Nestlé’s online advertising was included in the complaint and is reproduced below.

At the moment, the Nestlé television commercial featuring the “game” is still accessible on YouTube at https://youtu.be/gSzT6Gh91zE.

In the complaint (available here), Atari asserts a number of claims including trademark infringement, copyright infringement, false designation of origin, dilution, and unfair competition. Will any of these claims hold up? I’d say the copyright infringement claim has a fair shot. Atari’s claim of incurring actual damages seems like a stretch though. In fact, Nestlé could plausibly argue that the advertisement increased demand for the Breakout game. If you don’t mind a little armchair quarterbacking, maybe some discovery on whether downloads of Breakout games increased shortly after Nestlé ‘scampaign began?

Setting that issue aside, Nestlé seems likely to win in the court of public opinion as the average member of the public is likely to think “what’s the big deal?” Yet in Atari’s defense, the company owns significant rights in numerous, valuable game franchises with extensive merchandising value. I’m never a fan of slippery slope arguments, but there is a reasonable concern here as to the effect of such use on merchandising rights. And with all that as a back drop, I’d say the chances of a quick settlement are high.

In the meantime, I’ll be scouring eBay for some good deals on Atari 2600s.