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Judge Denies Microsoft Motion To Dismiss Accessory Suit

Judge Denies Microsoft Motion To Dismiss Accessory Suit

April 26, 2010 | By Kris Graft

April 26, 2010 | By Kris Graft
More: Console/PC

A U.S. District Court judge ruled last week that UK-based video game accessory manufacturer Datel may proceed with an antitrust case against Microsoft relating to third-party memory cards and accessories.

The court denied Microsoft's motion to dismiss allegations that the console maker released a software update for Xbox 360 that blocked use of Datel's third-party memory cards in order to gain an unfair advantage in the accessory market.

"We’re gratified that the case will proceed and Datel looks forward to reestablishing the benefits of competition in the accessory market for all Xbox 360 users,
said Datel's attorney Daniel Asimow of San Francisco-based law firm Howard Rice.

In November 2009, Datel filed an antitrust lawsuit against Microsoft over the system update, which rendered Datel memory cards inoperable. The accessory maker accused Microsoft of "predatory conduct" in the matter.

Datel's Max Memory cards arrived in May 2009 in 2GB ($40) and 4GB ($50) versions. Microsoft's first-party Xbox 360 memory units are 512MB and sell for $30. Datel said Microsoft's memory units sold for $60 prior to the release of Datel's less-expensive Max Memory.

Microsoft filed to dismiss the complaint in January this year, relying on the case of Apple vs. Psystar. In that suit, a judge dismissed Psystar's antitrust claims against Apple -- Psystar was creating Mac clones that were running Apple's OSX, but a judge noted that the Mac OS user license agreement restricts such use of the software.

Microsoft's product warranty says that buyers agree that they will not use third-party accessories with the console. Datel claims that this provision is "buried" in the terms, and a judge called the wording of Microsoft's terms "ambiguous."

"Unlike [Apple vs. Psystar], here there is no clearly binding contractual restriction and it is not possible for a consumer to forecast all of his or her accessory needs at the time of the initial purchase," said Datel's attorneys in a statement.

Datel also had accused Microsoft of monopolization of the console market, but Datel said the court dismissed the complaint because Datel is "not [a] direct participant in the console market."

Separately, earlier this year Microsoft sued Datel for controller patent infringement.

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