The Xbox 360 risks being banned in America if the US International Trade Commission (ITC) agrees with the initial findings of its Judge David Shaw, handed down in April.
Shaw found that Microsoft, owner of the Xbox brand, had violated 4 patents owned by Motorola Mobility. His decision will be reviewed by the ITC in August, and if the commission agrees, sales of the Xbox 360 could be banned throughout the US, with potentially disastrous consequences for Microsoft.
The alleged infringements relate to technology used by the Xbox 360 S platform to transmit and compress video, purportedly covered by patents held by Motorola Mobility, a company that was recently acquired by Google.
Serving the public interest?
Microsoft argued that the ban would not serve the public interest, in that it would leave the Sony PS3 and Nintendo Wii as the only home consoles available for sale in the US. In his recommendation of 7 May, Shaw disagreed, noting there was no allegation or demonstration “that Sony or Nintendo would fail to meet the demand for consumer video gaming consoles”, that “there is a strong public interest in enforcing intellectual property rights”, and that not to enforce those rights in light of a potential economic impact is appropriate only in exceptional circumstances.
In addition to the ban, Shaw also recommended that Microsoft be ordered to post a bond equal to 7% of the wholesale value of all unsold consoles in the country. In argument, Microsoft advocated that no bond was necessary, while Motorola went after the full 100%.
Next steps in the process
The Xbox is not yet subject to a ban, and will remain on shelves until a final ruling has been made. The ITC commissioners have until 23 August to decide whether the initial ruling should stand, be amended, or rejected. If they agree with Shaw, the Obama Administration will have a further 60 days to review the decision, and make the final call.
Despite Shaw’s recommendations, Microsoft remains confident that the commissioners will rule against the ban. A company spokesperson said the ruling:
‘is the first step in the process leading to the Commission’s final ruling and has no immediate effect on the availability of Xbox 360 in the U.S. We remain confident the Commission will ultimately rule in Microsoft’s favour in this case and that Motorola will be held to its promise to make its standard essential patents available on fair and reasonable terms’ quoted in PC Mag.com 23 May 2012.
The bigger picture
This is just one of the recent engagements in a much wider patent battle, which has also seen rulings against Motorola, for example in Germany in relation to Microsoft’s patented technology enabling longer SMS text messages to be split up and reassembled. In May, the ITC also sided with Microsoft in a dispute over Motorola’s use of patented technology for ‘generating meeting requests and group scheduling from a mobile device’, which, if approved by the Obama administration could see a ban imposed on the import of Motorola smartphones into the US unless the feature is removed from the Android software shipped with the devices.
Earlier in the year, Motorola was also granted an injunction against the distribution of the Xbox, Windows 7, Internet Explorer and Windows Media Player in Germany, after a ruling that Microsoft was infringing two Motorola patents. A subsequent ban against sales of its games consoles in the US could have a significant impact on Microsoft’s bottom line. Still, whereas Microsoft might suffer losses in connection with one of its more successful product lines, Motorola Mobility faces a potential exclusion order covering a huge segment of its business.