Disclaimer: I chose the colors from first principles and drew the graphics for Xio's version from scratch in Photoshop without any reference (as a volunteer; it was my friends' company), had to sit through depositions about this, etc.

In theory the Tetris Company is incorrect on the merits (the features they claim as "trade dress" are clear aspects of the game rules, not ornamentation, and in Xio's game had quite notable gameplay differences, especially in its multiplayer variants, and significant graphical style differences) and a discerning judge should see through the argument and find against them.

In practice judges often make a snap judgment based on personal prejudices (in this case, that the appearance amounted to "wholesale copying" that "pilfer[s] another's creativity" "without offering any originality or ingenuity of its own" and that such features as the way the pieces move falling from the top of the screen and the dimensions of the game board are "expression" rather than gameplay, and "Xio was also free to design a puzzle game using pieces of different shapes instead of using the same seven pieces used in Tetris." etc.) and ignore the letter and spirit of the law, filling in the decision starting from the conclusion. It has to date been too bothersome for someone with deep pockets to contest this to the appellate level.