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Xbox 360 ban struggle in US could drive up prices - legal expert

Import ban is "unlikely", Motorola may be angling for higher royalties

A recent US judge's recommendation that certain Xbox 360 models be banned from import to America is "unlikely" to pass into law, a legal expert has told OXM, but Microsoft's on-going patents battle with Motorola may lead to higher prices for consumers.

Motorola has been engaged in litigation with Microsoft over patents since 2010. Now owned by Google, the firm recently won a ruling that Xbox 360's wireless and video compression functions infringe on four patents relating to H.264/MPEG-4 Part 10 video coding standards and 802.11 WiFi standards. Wiser heads than ours have recapped the saga over at ArsTechnica.

Microsoft denies the accusation, naturally, arguing that in getting patented technology accepted as industry standard, Motorola has "committed to the IEEE, ITU and ISO standards bodies that their essential patents are licensed on non-discriminatory bases offering fair and reasonable terms." In a probably questionable nutshell: if you're going to make it for everybody, everybody should be able to use it.

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In May, US administrative law judge David Shaw issued a recommendation that the International Trade Commission ban the importation of 4GB and 250 GB Xbox 360 consoles to America. As the majority of Xbox 360 consoles are manufactured overseas, this effectively amounts to a sales ban. For Shaw, "enforcing intellectual property rights outweighs any potential economic impact on video game console buyers".

Representatives of Apple, Nokia, Activision and Intel have joined several members of the US House of Representatives in defending Microsoft against the move.

Yesterday, OXM contacted registered patent attorney and games industry attorney S. Gregory Boyd of Davis & Gilbert LLP for his thoughts on the affair. "Yes, a ban is one possible, but unlikely outcome of the ITC decision," Boyd commented. "One of the main issues here is whether or not money damages are enough to make Motorola whole at this stage.

"The ability to block imports of the Xbox is large piece of leverage to wield. That leverage is clearly aimed to force higher patent royalties which will inevitably lead to higher prices for consumers," he warned.

"The FTC and most lawmakers writing about this issue do not support an import ban. One reason an import ban may not make sense here is that the patents in question are standards-essential patents meaning using those patents is important to meet industry compatibility standards.

"As such, Motorola will have promised to license the patents under a standard known as FRAND, Fair Reasonable and Non-Discriminatory licensing. There is an argument that FRAND standards essential patents should always be subject to negotiated royalties and not import bans."

Boyd also suggests that Motorola's case against Microsoft may be a question of sour grapes. "It is also important to view this in the larger context of a struggle between the companies. In May of this year Microsoft won an import ban on certain Motorola phones as a result of a patent infringement case. It would not be a stretch to say this looks retaliatory.

"Previously Motorola won a similar type of sales ban in Germany relating to Windows 7, so it is difficult to keep score or even know 'who started it' in the elementary school playground sense."

More as we get it.

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