Datel has filed a lawsut against Microsoft, following the latter's Dashboard update which rendered third-party memory cards useless.

The antitrust lawsuit was filed in San Francisco federal court on Monday, complaining that Microsoft had deliberately altered its technology to force Datel Max Memory cards out of the market.

"For many years, Datel has brought to the public products that offer more capacity, extra functionality or other game enhancing features with the aim of offering a reasonably priced alternative to first-party accessories," said Datel founder Mike Connors. "The Max Memory card plugs into the Xbox 360 and allows a user to store games, characters, and similar information.

"It permits a player to transport game information between Xbox systems. The Microsoft memory card does exactly the same thing, with the difference that it offers only one-quarter the memory while listing for the same retail price. Datel engineered the Max Memory card to be 100% compatible and over 50,000 Max Memory cards have been sold without a single report of harm to the Xbox console."

Connors had previously criticized Microsoft's recent upgrade - which also brought Twitter and Facebook to Xbox 360 - saying that it  would "prevent customers from exercising their freedom of choice". In the lawsuit, UK-based Datel argued that Microsoft's first-party products are more expensive than Datel's, offering less memory.

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Marty Glick, the senior attorney representing Datel in the lawsuit, said, "Microsoft has taken steps to render inoperable the competing Datel memory card for no visible purpose other than to have that market entirely to themselves. They accomplished their recent update by making a system change that will not recognize or allow operation of a memory card with greater capacity than their own. We believe that with the power Microsoft enjoys in the market for Xbox accessories this conduct is unlawful."