The ongoing legal battle between Bethesda Softworks parent company, ZeniMax Media, and Interplay over the Fallout MMO game license has finally been resolved, yet only for Bethesda’s benefits it seems.

Production for the Fallout MMO has been killed and all rights to develop the MMO have been turned over to Bethesda effective immediately. Interplay also can no longer use the Fallout brand for any future game development.

ZeniMax is to pay Interplay $2 million as part of the settlement and allow Interplay to continue to sell the original Fallout Tactics, Fallout, and Fallout 2 PC games and merchandise through December 2013. After that, all of the rights are to be turned back over to Bethesda.

“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.”

Bethesda originally license the Fallout brand to Interplay back in 2007  to make a Fallout MMO provided the company could secure $30 million for the project and begin development by April 2009. Interplay failed to begin development by that time, but stating it would begin soon.

On lesser grim terms, Bethesda and ZeniMax Studios may be prepping to unveil an Elder Scrolls massively multiplayer game this May. Rumors have been circling the web for quite some time now about an Bethesda related MMO, but they all revolved around an MMO set in the Fallout universe. I guess we were wrong.

According to Tom’s Guide, an anonymous source said the MMO will take place 1,000 years before the time of Skyrim, named game of the year at the Game Developers Choice Awards, and hundreds of years before any of the other Elder Scrolls titles, near or during the “Second Era.”

The game will feature three playable factions, all represented by either a lion, dragon, or a bird of prey.

Tom’s Guide said that the game will be announced some time in May followed by presence at E3 in June and a presentation at Quakecon 2012 in August.

It would be interesting to see how Bethesda plans on tackling the MMO universe. Lets just hope for a massive new world to explore and some dragon guts to spew open!