They couldn't make their own machines according to the licensing agreement? this couldn't put the machines into certain places?
So that's basically everything, time for the
*** SPOILER ***
In the 70's, Namco was Atari's distributor in Japan and were going to distribute Breakout. However, the contract with Atari stated only Atari themselves could make the machines.
The game became a success in Japan, but shipments were slow, and Masaya Nakamura, founder and boss of Namco, noticed there were a bunch of unofficial Breakout copies around, many more than what he had gotten from Atari. After tracking down the source, he found out they were made by a Yakuza clan.
At first, he asked them to stop (yeah, that's gonna work) but instead they offered to help Namco become the top game company in Japan. He refused, and knowing he couldn't stand up to them, he wanted to get more official copies into the market, and asked Atari for more, but shipments were still slow. He first tried talking to Nolan Bushnell about the situation, but Bushnell was hungover from a party the day before and wasn't able to discuss much - disappointed, Nakamura went back again and decided he'd have to make his own Breakout games, even if this wasn't allowed by the contract. Atari stopped getting Breakout orders, and assumed the game didn't do that well in Japan - until an Atari representative who visited Japan saw way more Breakout machines around than what what Atari had sent Namco. This ended in a lawsuit against Namco that Atari won.