Microsoft has rejected part of a patent infringement lawsuit settlement offer from Motorola Mobility, claiming the Google-owned firm's demand for 2.25 per cent of the price of every Xbox sold is excessive.

Both companies are in bitter dispute over the technology built into each other's products. In an attempt to bring the battle to an end, the two are drawing up terms for a patent cross-licensing deal.

Motorola Mobility demands payment for the alleged use of its tech in both the Xbox 360 and in Windows, while Microsoft wants royalties for IP it maintains Google's Android system utilises.

The Redmond firm was offered 33 cents for each Android phone that uses ActiveSync technology in return for 50 cents per copy of the Windows OS sold as well as the lucrative Xbox 360 demands, Reuters reports.

"While we welcome any good faith settlement effort, it's hard to apply that label to a demand that Microsoft pay royalties to Google far in excess of market rates, that refuses to license all the Microsoft patents infringed by Motorola, and that is promptly leaked to the press," said Microsoft's Horacio Gutierrez.

The settlement offer was revealed yesterday in a Bloomberg interview with Kirk Dailey, VP of intellectual property at Motorola Mobility.

Motorola Mobility claims that the Xbox 360 infringes five of its patents, including video decoding and wireless networking technology.

In a preliminary ruling, the US International Trade Commission sided with Motorola Mobility. The parties are due meet again in August, but the ITC has already recommended halting imports of both MS and MM products that infringe each other's patents until the dispute is settled. ®