Bethesda Softworks parent company ZeniMax Media said today it has settled the ongoing legal battle between it and Interplay over the Fallout MMO game license.

Under the terms of the settlement, the license granted to Interplay to develop the Fallout MMO title is now null and void, and all rights to develop the MMO have been turned over to Bethesda effective immediately. Additionally, Interplay can no longer use the Fallout brand for game development.

ZeniMax will pay Interplay $2 million as part of the settlement and each party will pay their own legal costs. However, Interplay can continue to sell the original Fallout Tactics, Fallout, and Fallout 2 PC games and merchandise through December 2013. After that time, the rights to those titles become property of Bethesda.

Bethesda also said it also reached a settlement with the purported developer of the Fallout MMO, Masthead Studios. No payments were made by either party in this settlement, and the developer acknowledges it has no legal right to use any Fallout intellectual property and agrees it will not use any such intellectual property of Bethesda in the future.

"While we strongly believe in the merits of our suits, we are pleased to avoid the distraction and expense of litigation while completely resolving all claims to the Fallout IP," said Robert Altman, chairman and CEO of ZeniMax Media.

"Fallout is an important property of ZeniMax and we are now able to develop future Fallout titles for our fans without third party involvement or the overhang of others' legal claims."

This lawsuit began after Bethesda acquired the Fallout license from Interplay in 2007. Bethesda conditionally licensed back to Interplay trademark rights to make a Fallout MMO provided the company could secure $30 million for the project and began development by April 2009. Bethesda alleged Interplay did not meet those conditions, but Interplay would not give up the license for the Fallout MMO; insisting it would eventually develop the game.