Interplay will continue development.

Bethesda sued Interplay back in 2009 to block development of Fallout Online, an MMO based on the Fallout franchise. Since then, the court battle has continued, with Bethesda losing multiple decisions along the way.

The court's latest decision blocks Bethesda's appeal against a recent ruling. According to Joystiq, Bethesda was denied a preliminary injunction against Interplay in June, and attempted to appeal the decision. That appeal has now also been denied.

Bethesda's argument was that "the district court abused its discretion and misapplied the law in concluding that Bethesda failed to establish a likelihood of irreparable harm." The injunction would have prevented development of Fallout Online, but with the denied appeal, the game will continue to be worked on.

The court battle still isn't over, as Bethesda owns the Fallout license. If the game is eventually completed, Interplay will still need to work out a deal with Bethesda for Fallout Online to be released. This is Bethesda's second high-profile legal loss in recent weeks, as the publisher also lost a recent decision in its legal battle against Minecraft creator Mojang.