On
Monday, U.S. International Trade Commission judge David Shaw ruled that
Microsoft was infringing on four Motorola Mobility patents. The infringements
involve the wireless connectivity and video compression technologies on the
Xbox 360 console. The ruling is subject to review by a six person ITC commission,
which plans on delivering a decision by Aug. 23. If Shaw’s ruling is upheld,
Microsoft will be forced to either pay a 2.25% royalty to Motorola on all sales of infringing
products or cease U.S. import of the console.
“Generally,
imposing bans on imports is always a bad idea,” said Diana Thomas, assistant
professor of economics at Utah State University. “What it essentially does is
drive up the price of competing products that are still sold in the country.”
Thomas
said that if Microsoft gets cut out of the market, Sony and Nintendo will try
to increase their output to fulfill consumer’s demands for a console. This will
drive up the price of their products.
“That’s
bad for consumers,” Thomas said, “and good for the producers who are still
allowed to sell.”
Xbox
360 owner Andrew Quebbeman said that Microsoft really only has one option
available to them if Shaw’s ruling is upheld.
“They
would have to pay. They couldn’t miss out on the huge profit of the 360,”
Quebbeman said. “It would destroy the console, and give all their sales to the
PS3, or so help me, the Wii.”
Thomas
said that whether Microsoft chooses to pay the royalties or accept an import
ban will depend on economics.
“It
totally depends on where their profit margin is right now,” Thomas said. “If
they can continue to sell the Xbox and pay the royalties and still make a
profit, or at least break even, they should still sell it. It would make
economic sense.”
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