A court in Germany ruled Wednesday that Microsoft infringed two patents held by Motorola, in a case that could affect sales of its popular Xbox 360 console and the Windows 7 operating system.
The patent spat between the two companies centers on technology used for video compression that is owned by Motorola Mobility Holdings, which Google is in the process of buying for $US12.5 billion.
Following earlier complaints from Microsoft and Apple, the European Union's competition watchdog opened two separate probes into whether Motorola unfairly limited rivals from using its patents by demanding exorbitant fees.
In Wednesday's ruling, the state court in the southern city of Mannheim upheld Motorola's complaint on the patent breaches and declared Microsoft liable for unspecified damages.
The court also ordered Microsoft to remove all products that infringe the patents from the German market, including its Xbox 360 console and the Windows 7 operating system.
But both parties have seven days to appeal before the verdict comes into force, and Microsoft spokesman Thomas Baumgaertner said the company planned to do so. Should Motorola want the verdict enforced before a final appeals ruling is issued, it would have to deposit several tens of millions of euros as a legal security, the court said.
A US court meanwhile has warned Motorola not to enforce the German verdict until it too has considered the patent issue.
"At the moment, there is no risk that we will be ordered to halt sales," Baumgaertner said.
He said Microsoft hoped the German court's ruling could open the way for a fairer licensing deal with Motorola.
Motorola issued a statement welcoming the verdict.
"We remain open to resolving this matter," said the company. "Fair compensation is all that we have been seeking for our intellectual property."