Microsoft has turned down a settlement offer from Motorola that would have ended the patent dispute between the two companies, which could result in the Xbox 360 being banned from the U.S.

The International Trade Commission (ITC) has been advised to ban the import and sale of Xbox 360 systems in the United States by Judge David Shaw. Shaw also deemed that Microsoft should pay Motorola seven percent of the value of any unsold Xbox 360s remaining in U.S. stores.

The ITC can either allow this decision to stand, amend the terms, or throw the case out. Should they agree with Shaw’s decision then President Barack Obama will have 60 days to review the case and make a final ruling.

The legal battle surrounds four patents connected to Motorola’s ActiveSync technology which Microsoft uses in Windows 7, Internet Explorer, Windows Media Players and Xbox 360 Slim consoles. Microsoft claims that Motorola demanded ”unreasonable licensing fees” for use of the technology that would have resulted in the company paying $4 billion each year to cover the cost.

In the settlement offer Motorola asked for a royalty payment of 2.25 percent on each Xbox 360 sale and 50 cents from each copy of windows sold. Microsoft has rejected this offer, and time is running out for the two parties to reach an agreement.