NeoGAF points out, this bit of confusion has to do with the short-lived FOX show Killer Instinct from 1995. Microsoft announced in mid-September it was in the process of renewing the long-languishing intellectual property, but did not specify the purpose.
So, what does the rejection mean? We checked with attorney Mark Methenitis who pens Law of the Game.
"In short, this means ... more or less nothing," Methenitis told us when asked if there was more to the rejection. "It's just an office action; they happen on lots of trademark applications, and is not by any means the final say on the application. It just means that Microsoft has to provide more evidence to overcome their objection to move forward with the application."
He continued, "All things considered, I would imagine that Microsoft has a pretty strong position reverting back to the previous Killer Instinct games, which far predate the Fox filing, and moreover, there's no evidence of actual confusion between that show and the game."
According to Methenitis, Microsoft has six months to respond. He equated this action to fighting games, saying it's like taking some hits in the first round, but you haven't even come close to losing the bout.