ITC Judge Says Xbox Should Be Banned In The US
May 23, 2012

ITC Judge Says Xbox Should Be Banned In The US

Two models of Microsoft´s Xbox 360 system should be banned in the US due to patent infringements on four Motorola patents, a judge for the International Trade Commission (ITC) recommended on Monday.

Judge David Shaw made the recommendation that the Xbox 360 4GB and 250GB versions should be pulled from store shelves and further shipments be blocked. He also said Microsoft should post a bond equal to 7 percent of the wholesale value of the unsold consoles already in the US.

Shaw´s recommendation follows a decision made by him last month that the two console models infringe on Motorola´s H.264 video compression codec and wireless patents.

Motorola filed an initial complaint with the ITC in November 2010, alleging that Xbox used Motorola-developed technology that allows set-top boxes to decode transmissions between its Droid mobile devices.

Microsoft argued that Shaw´s recommendation to ban its gaming consoles would be disadvantageous to public interest as it would leave consumers of video game consoles with only two options: The Sony PlayStation and the Nintendo Wii.

Shaw rejected Microsoft´s argument, stating that intellectual property rights far outweighs potential economic impact on video game console buyers. He also pointed out that Microsoft failed to file a response to the ITC´s request for comments in November 2010, after Motorola´s complaint was filed.

“Additionally, it has not been alleged or shown that Sony or Nintendo would fail to meet the demand for consumer video gaming consoles in the event that an exclusion order is issued,” Shaw wrote.

As for the bond value, both Microsoft and Motorola opposed the finding. However, while Microsoft called the bond unnecessary, Motorola argued that the bond should be worth 100 percent of the declared value of unsold Xbox consoles.

Microsoft argued that a more reasonable bond would be equal to the actual value of a reasonable license for the H.264 technology, which it estimated at 2.5 percent of the Xbox wholesale value.

Shaw´s recommendation will be reviewed by the ITC, which has the power to block imports that infringe on US patents, and will likely issue a statement in August.

The judge´s ruling follows an earlier injunction Motorola won in Germany, allowing the wireless company to ban the distribution of Microsoft products, as well as recall and destroy Windows 7 and Xbox 360 units still on German store shelves.

The recommendation was also made public on the eve of Google´s official acquisition of Motorola Mobility, which could open the door for more patent wars between the two tech giants. Google said it was interested in purchasing the failing mobile phone maker mostly for its strong patent portfolio.

If Shaw´s recommendation becomes final, President Obama will have 60 days to review the decision.