Alleged patent infringement
Smartphone maker Motorola Mobility has secured an injunction stopping the sale of some Microsoft products in Germany, including browser Internet Explorer, Windows 7 software, the Xbox games console and Windows Media Player.
Motorola, which is being taken over by Google, alleged that Microsoft had infringed patents integral to the provision of H.264 playback and coding, which is video compression technology used for web software such as Adobe Flash Player and Microsoft Silverlight, as well as Blu-ray discs.
Microsoft has argued that if it licensed all relevant products with Motorola's intellectual property rights - of which around 50 are in dispute - it would result in an annual bill of $4bn (£2.5bn), going against Motorola's commitment to the industrial licensing obligation known as FRAND (fair, reasonable and non-discriminatory terms). Motorola disputes the amount that Microsoft claims it would face.
Microsoft plans to appeal
A German court in Mannheim ruled that Microsoft cannot distribute the products. However, Motorola is not able to enforce the decision until a US court lifts a restraining order, which was imposed as a result of the FRAND dispute. This is due to happen next week.
A Microsoft spokesman said: "We are confident that Motorola will eventually be held to its promise to make its standard essential patents available on fair and reasonable terms for the benefit of consumers who enjoy video on the web.
"Motorola is prohibited from acting on today's decision, and our business in Germany will continue as usual while we appeal this decision and pursue the fundamental issue of Motorola's broken promise."
A hearing has been set for 7 May 2012 and the case may also be considered by the European Commission.
Daniel Nolan, managing director at theEword, said: "This case represents the difficult balance between allowing companies to defend ownership of their innovations, while maintaining a fair playing field. Microsoft is a huge business, but if the IP fee would actually be £2.5bn a year, it would be a stretch even for them."