New York - Video game publisher Take-Two Interactive has begun settlement negotiations in a class-action lawsuit over the sexually explicit game content hidden in the code of its popular "Grand Theft Auto" title.

A federal judge signed an order made public on Wednesday that stays the lawsuit while the settlement talks proceed, with a progress report scheduled for March 12.

The game was initially rated "M", or suggested only for those over 17, but when the virtual sex content was discovered the game was re-rated "AO" Adults Only (18+), a category that many retailers refuse to stock.

The lawsuit against Take-Two claims the company violated consumer protection laws by failing to provide an adequate rating from the outset.

While New York-based Take-Two still also faces litigation over the "Hot Coffee" scandal from the Los Angeles City Attorney's office and the District Attorney's office in Manhattan, the Federal Trade Commission last year settled its own probe into the matter, declining to assess any fines or penalties against the company.

Related Links:
http://tinyurl.com/2u8cmu (Reuters)

http://arstechnica.com/news.ars/post/20070301-8957.html

http://www.take2games.com