Fairfax video-game maker Mythic Entertainment Inc. announced yesterday that it had reached a settlement with Microsoft Corp. that ends a federal lawsuit claiming the software giant had infringed on the local company's trademarks.

Mythic filed suit in U.S. District Court in Alexandria last December to bar Microsoft from producing a game called Mythica, arguing that the title could create confusion among consumers and potentially have a negative impact on its own business.

Microsoft announced in February that it had stopped developing the game for reasons unrelated to the legal action. Under the settlement, Microsoft agreed not to use the name Mythica or certain derivations in the future, and it transferred rights associated with Mythica to Mythic for "undisclosed consideration," according to a statement by Mythic.

Neither party admitted fault or liability as part of the settlement.

"All we wanted in the end was to ensure that . . . no one else is going to use the name Mythica for a game that is like ours," said Mark Jacobs, Mythic's president and chief executive.

Jacobs's company specializes in large-scale multiplayer computer games, in which players pay a monthly subscription to take on roles as warriors or wizards in virtual online universes; the company's flagship title, with about 225,000 subscribers, is called Dark Age of Camelot.

Last year, Microsoft announced with some fanfare that it was preparing to release its own game called Mythica. Many gaming aficionados said the new game appeared, judging from early publicity, to be based on similar scenarios as Mythic's game. A spokesman for Microsoft declined comment on the matter yesterday.

Pentagon City resident Darrin Schrader, a longtime player of Dark Age of Camelot, said he hadn't concerned himself with the skirmish between the two companies since Microsoft had stopped hyping its game online.

"I thought it was pretty much done when Microsoft stopped the [Mythica] Web site. That was the first sign that Mythic might come out okay here," he said.