Microsoft is also claiming that Datel copied the "authentication" code, byte-for-byte, from Microsoft's own hardware.
Up to this point, Datel has been very resistant to discovery requests regarding that code. If it turns out to be true, then they'll likely lose handily. It won't set a bad DMCA precedent, but it's a shame for consumers.
Wired is hosting a copy of Microsoft's motion to compel discovery, which contains all kinds of neat bits regarding the reversing (or lack thereof) of the handshake code in the peripherals: