The last time we heard the name Killer Instinct, was late last year when Microsoft was attempting to renew trademark rights for the old Rare-developed fighting game franchise from the tail-end of the SNES era. However, that process hit a snag when the trademark office rejected their claim due to an unrelated (and cancelled) 2005 TV crime drama developed by FOX having appropriated the same title.
It seems there's been a few legal handshakes between the two corporate giants since then however, as a new filing indicates they've agreed to share, rationally concluding that consumers aren't going to get the two properties mixed up (thanks NeoGAF):
The Applicant has entered into a Coexistence Agreement with the Owner of the cited application, a copy of which is submitted herewith. As shown in the attached Coexistence Agreement, the Owner of the cited application consents to registration of the subject application.
That Microsoft has gone to so much trouble certainly suggests that they have upcoming plans for the brand, but whether that's its just some kind of spit-shined re-release of the original SNES/Arcade/N64 games, or a modern reinvention remains to be seen.