ITC Judge Recommends Xbox Ban in the U.S.

Posted by · May 23, 2012 12:59 pm

Microsoft Xbox banAfter deciding in April that the Xbox violated four Motorola Mobility patents, an International Trade Commission judge recommended this week that imports and sales of the Microsoft gaming system be banned in the United States. In a court document (PDF) obtained by Wired, ITC Administrative Law Judge David Shaw made the following recommendations:

[I]t is recommended that the Commission enter a limited exclusion order against infringing Microsoft products. It is further recommended that the Commission issue a cease and desist order. Additionally, it is recommended that Microsoft be required to post a bond for the importation of accused products during the Presidential review period.

Given the structural makeup of the ITC, the judges recommendations are just that—suggestions—meaning that Xboxes won’t be disappearing from store shelves right away, or even soon for that matter. The Commission’s six-member board of commissioners still must review and approve Judge Shaw’s recommendation, which they can modify as they see fit between now and the August 23deadline. Furthermore, even if the board were to approve the Shaw’s recommendation as is, President Obama would still have to sign the Commission’s decision within 60 days to be made effective.

Put simply, the Xbox isn’t going anywhere in the near future.

However, if Motorola gets its way, Microsoft could end up paying a rather hefty some when all is said and done. In addition to a full ban on the both the further import and sale of the Xbox within the U.S., the latest Google acquisition is requesting that the bond discussed in Shaw’s recommendation be a fine equal to the value of all Xbox consoles sold in the United States.

Meanwhile, Microsoft maintains that such a ban—let alone such a considerable bond—would be “contrary to the public interest,” indicating that there are “only two primary competitors to Microsoft’s Xbox gaming system: the Sony Playstation and the Nintendo Wii.”

The ITC judge saw things differently, however, concluding that Microsoft’s concerns were “not persuasive.” Instead, Shaw found that a more compelling public interest rested in the enforcement of intellectual property rights, reserving matters in which potential economic impact prevents patent enforcement for “exceptional circumstances” only.

Motorola XOOM

Before Google begins patting itself on the back for finally closing the Motorola, though, it is worth noting that Microsoft stands to deliver an even more devastating blow against the patent-rich electronics company. After Monday decision by the ITC to award Microsoft a ban on the import and sale of all Motorola smartphones and tablets. Such a decision follows an ITC ruling from last December, which the Commission judge found that the Motorola Atrix, Droid, and Xoom devices (18 devices total) all violate a Microsoft patent.

As it stands, Motorola is now one signature away from being effectively cut out of two major U.S. markets. In the meantime, which could take up to 60 days as White House reviews the ITC’s decision, Motorola is required to pay a 33-cent levy on each device it imports.

Wired writer Nathan Olivarez-Giles offers a fair assessment of the present situation, which, given the circumstances, effectively pits Microsoft against tech archrival Google:

While the Xbox is big business for Microsoft, phones and tablets are just about the entirety of Motorola Mobility’s business. The two separate ITC decisions could potentially result in major losses for both Microsoft and Motorola Mobility.

If the idea of no Motorola phones and no Xboxes sounds like a gadget-geek nightmare to you, take some comfort in the fact that there is still some time for the two companies to settle the two respective complaints and license each other’s patents.

While a settlement involving a mutual licensing agreement may resolve this particular squabble between Microsoft and Motorola—or Google, rather—it will serve as little more than a temporary bandage on what remains an increasingly expensive, convoluted, and ultimately counterproductive American patent system. Until real changes are made to the way that intellectual property is defined and protected in the United States, such needless quarrels are bound to continue as these tech giants continue adding to their patent stockpiles at the ultimate expense of the consumer.

For more on the potential U.S. Xbox ban…