Texas-based law firm AbingtonIP has launched a class-action lawsuit against Microsoft for its large-scale ban of Xbox 360 users from the Xbox Live online gaming community who have illegally modified their consoles. The firm acknowledges that modification of the consoles is against the terms of use for Xbox Live, but argues that the timing of the bans generated Xbox Live revenues, thanks to the release of popular online titles such as Halo 3: ODST and the more recent Modern Warfare 2.

Banning users with the illegally modified consoles prior to the release of these two games would have cost Microsoft a large amount of money from Xbox Live subscriptions, AbingtonIP maintains. Also, the law firm says Microsoft has unfairly locked out users who have modified their consoles for non-piracy reasons, such as enabling added HDD functionality, Netflix, game add-ons, music, and arcade games. Information on users has also been gathered without their permissions, it says.

AbingtonIP wants plaintiffs to join the class action lawsuit if they have been banned from Xbox Live and haven't been issued refunds for their unused subscriptions. [via TGDaily]