Microsoft Allowed Access to Datel Xbox Discovery

Microsoft Corp. has recently won a bid to force Datel Holdings Ltd.
to produce documents and sample products in an action involving Datel’s Xbox 360
accessories.  The Judge has ruled in favor of
Microsoft and ordered that certain documents must be produced on behalf of Datel relating to allegations that it hacked the Xbox security system in order to produce its line of Xbox accessories.  Datel must also produce information and
materials concerning its inventory of current and past product samples and any
offers to sell its technology.  In certain
circumstances, the Judge said, Datel will be able to let Microsoft inspect
Datel’s products at its counsel’s office in San Francisco or charge Microsoft
for the products.

The underlying suit, Datel Holdings Ltd. et al. v. Microsoft
, case number 09-cv-5535, is currently pending in the United States
District Court for the Northern District of California.  In it Datel is alleging
that Microsoft reconfigured its Xbox system to
allow only the use of Microsoft memory cards, which Datel claims pushed it out
of the market for Xbox accessories in violation of, among other claims, the
Sherman Act.  Additionally, Microsoft has filed counterclaims alleging that
Datel breached its contractual obligations as a subscriber to the Xbox Live
service and violated the Digital Millennium Copyright Act. 

Previously, Microsoft’s bid to dismiss Datel’s
antitrust case failed when the presiding Judge ruled against its motion to
dismiss the tying, unfair competition and intentional interference with
prospective economic advantage allegations.  The ruling was based on the Judge’s
determination that the Xbox license agreement was somewhat ambiguous.  However,
Microsoft was able to obtain a partial dismissal of Datel’s Sherman Act claims
as the court found that Datel was not a direct participant in the
respective market. 

The mater is currently
scheduled to go to trial in or about October 2011.