Microsoft cites a letter that it says is from Motorola's vice president of intellectual property that states the royalty for Motorola's patents must be based on the price of the end product, for instance, an Xbox 360. Microsoft argues that the royalty should be based on the cost of the chips and components that provide wireless connectivity for the Xbox 360, which make up a small fraction of the overall cost of the device.

Microsoft is also arguing that the pertinent Motorola licenses aren't actually even essential to WLAN or the H.264 video technology.

The companies are already embroiled in a patent dispute over mobile phones. , claiming patent infringement in Motorola's Android phones.

The IDG News Service