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Setting up an unusual conflict between courts on different continents, a judge in Germany ruled overnight that Microsoft violates two of Motorola Mobility’s digital video patents — ostensibly preventing the Redmond company from distributing Windows 7, the Xbox 360 and other products in the country.

However, based on a previous ruling against Motorola in Seattle, Microsoft says it will continue to sell those products in the country for now. U.S. District Judge James Robart last month granted Microsoft’s motion for a temporary restraining order to prevent Motorola from blocking sales of Windows and Xbox in Germany, regardless of the German court’s ruling.

The saga returns to Seattle next week for a pivotal hearing in Robart’s court.

The injunction from the German court was widely expected. From Microsoft’s perspective, the larger issue isn’t whether Microsoft violated the patents, but whether Motorola is being unreasonable in its demands for royalties on the technologies.

The case is being closely watched in part because Microsoft rival Google is in the process of acquiring Motorola Mobility for more than $12 billion. Microsoft has separately waged a successful campaign for patent royalties from makers of Google Android devices.

We haven’t yet been able to get a translated copy of the German court’s ruling, but consultant Florian Mueller has a report from Mannheim Regional Court on the FOSS Patents blog.

Microsoft says Motorola is obligated to license these patents on fair, reasonable and non-discriminatory terms (commonly known as FRAND) as part of its participation in standards organizations.

The Redmond company said in a statement today, “This is one step in a long process, and 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 Motorola spokeswoman tells Dow Jones Newswires, “We are pleased that the Mannheim Court found that Microsoft products infringe Motorola Mobility’s intellectual property. As a path forward, we remain open to resolving this matter.”

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