The american Chocolate maker Hershey wants a judge to let it keep on making virtual chocolate milk. The Pennsylvania company filed a complaint in June asking a federal judge to decide whether an application it created for the iPhone and similar devices violates a copyright held by Las Vegas-based software developer Hottrix.

The two companies are battling over respective iPhone apps that both involve making virtual chocolate milk. Hottrix filed a counterclaim this this week saying Hershey had improperly used its intellectual property, costing it more than $US12 million in lost profits and damage to its brand. It said the Hershey app “dilutes the market and serves to destroy the distinctiveness of Hottrix’ copyrighted works”.

Company lawyer Jason Fisher said Hottrix’s $US3 iMilk app came first and includes plain milk and strawberry milk. Hottrix’s court filing said Hershey’s free app has been downloaded more than 4 million times. Fisher said Hottrix previously settled a similar dispute with Coors over a beer-related app on confidential terms. Hershey’s legal filing says the app it launched in October is much different, including its use of a red and white straw to “drain” milk from the phone screen.

“Unlike the Hottrix application, the Hershey’s Chocolate Milk iPhone application ‘milk’ cannot be ‘drunk’ from the iPhone by tipping the phone (which is the only mechanism for drinking the milk in the Hottrix application), but can only be ‘drunk’ by use of the virtual straw,” according to the lawsuit, filed June 2 in US Middle District Court in Harrisburg.

This type of case is becoming far more common as the legal elements and status of iPhone software is becoming clearer int he wake of several intellectual property battles which began over the property in these apps which are now becoming more and more valuable as the use of the iPhone expands around the world. This case is likely to set an interesting precedent.