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Microsoft Rejects Motorola Settlement; Xbox Closer to Doom

CVG reports that Microsoft has rejected a settlement offer from Motorola Mobility that would finally end an extraordinarily expensive patent dispute. Motorola Mobility, now owned by Google, asked for a royalty of 2.25-percent on each Xbox 360 Slim sale, and $0.50 per copy of Windows, both of which use its patented ActiveSync technology.

Back in April, Judge David Shaw said that Microsoft should be handed a cease-and-desist order on sales of the Xbox 360 Slim console here in the United States unless the dispute was settled. He also said that the International Trade Commission (ITC) should ban Microsoft from importing the popular console from China. Microsoft should also cough up 7-percent of the value of any unsold Xbox 360 Slim systems still remaining on US-based retail shelves.

The legal drama between Microsoft and Motorola Mobility has spanned across courtrooms located in Germany and the US, and within the ITC panel itself. Microsoft claims that Motorola Mobility has breached the licensing contract by demanding "unreasonable licensing fees" for the use of the patents, requiring the company to spend around $4 billion USD each year to cover the licensing costs. Motorola claims that Microsoft gave up its right to negotiate on the royalty rate as soon as it began lawsuit action.

But now that Microsoft has rejected Motorola's offer, it's up to the ITC to allow the initial Xbox 360 Slim ban determination to stand, if it needs to amend specific terms, or send it back for a rewrite. Surprisingly, Activision and iPhone maker Apple are currently opposing a possible US market ban of the Xbox 360 Slim by the ITC.

Microsoft has already warned the ITC that banning the Xbox 360 Slim console would not serve the "public interest" (aka bad for the economy), as it would leave a gaping hole in the console sector, forcing consumer to choose between Sony's PlayStation 3 and Nintendo's Wii. Judge Shaw disagrees, saying that intellectual property rights takes precedence over consumer need.

Microsoft is also currently facing a Xbox 360 Slim ban in Germany thanks to a ruling made by a German court back in May. This verdict will not come into effect until the US-based lawsuit concludes.