A U.S. International Trade Commission judge has ruled that the console infringes on four patents held by Motorola, reports Bloomberg. Worst case scenario? It could result in a blockade of Xbox 360 consoles imported to the U.S.
The judge's findings next go to a full commission board, which will review the case and announce a final ruling in August.
Separately, Motorola has also demanded a 2.25 percent royalty on any products that make use of the patents. To put that in perspective, Microsoft's entertainment division, which includes of the Xbox, had global sales of $8.9 billion during the last fiscal year.
The ITC is unable to mediate cash settlements and can only blockade imports.
Microsoft disputes Motorola's right to the patents, arguing they cover aspects of an industry standard. Microsoft further it believes it will be vindicated when the full commission reviews the case.
The two companies have been debating the patent issue for a while now. In 2010, Microsoft filed a separate suit in the matter, accusing Motorola of seeking "unreasonable royalties" for the Xbox 360.
That suit, says Motorola, was what prompted the company to ask for the blockade.
"Microsoft continues to infringe Motorola Mobility's patent portfolio, and we remain confident in our position," Becki Leonard, a spokeswoman for Motorola Mobility, told Bloomberg. "This case was filed in response to Microsoft's litigate-first patent attack strategy, and we look forward to the full commission's ruling in August."
Cases like this rarely result in an enforced import ban. Should Microsoft lose, it's more likely to negotiate a settlement with Motorola to keep the flow of game systems steady.
- Company Legal & Law Matters