A legal battle between Microsoft Corp. and a French video game publisher appears to be holding up the development of a mobile version of Halo, the popular Xbox game.

Microsoft signed a deal in late 2005 with game developer In-Fusio SA to develop a version of Halo for mobile phones and other devices. In-Fusio is now accusing Microsoft of breach of contract in a lawsuit filed last month in a US District Court in Seattle.

In-Fusio agreed to make four payments to Microsoft of $500,000 (around £257,000) for the exclusive rights to develop the mobile game, according to its complaint. Its designs were subject to Microsoft's approval, but terms of the contract meant that Microsoft couldn't reject its proposals without reasonable grounds.

The French company says it submitted several game designs to Microsoft last year. Microsoft didn't respond to the proposals in a timely way, and then turned them down without any helpful feedback that would have allowed In-Fusio to redesign them, the lawsuit said.

Contract killing

At one point Microsoft suspended the royalty payments, and then in September last year it demanded a payment of $500,000, according to the suit. In-Fusio refused to pay on the grounds that Microsoft hadn't abided by the contract and was denying In-Fusio any chance to benefit from it.

In November, Microsoft sent a letter accusing the company of breach of contract and threatening to terminate the agreement if the French company didn't pay the latest royalty installment, according to the lawsuit. In-Fusio then took the matter to court, filing a breach of contract lawsuit on Dec 19 in the U.S. District Court for the Western District of Washington, in Seattle. In-Fusio is seeking a jury trial, a judgment that it has exclusive rights to develop the mobile version of Halo and unspecified damages.

Spokespeople for Microsoft could not immediately comment on the suit. The company has until Feb 1 to respond to In-Fusio's complaint, according to court filings. In-Fusio also was not available for comment.

In-Fusio did complete one part of the contract -- a Web site where gamers can download Halo ringtones and wallpapers to their mobile phones. But the benefits of designing a mobile version of the game itself would be "incalculable" to the developer, In-Fusio said. The terms of the deal call for the two companies to split the income and royalties from the game, according to In-Fusio.

Based in Bordeaux, In-Fusio makes mobile versions of Age of Empires, It's Mr. Pants, Midtown Madness and Sabre Wulf.