Microsoft has been sued a lot. It happens. This one could end up costing them a decent chunk of change, however. In 1994, Peter Hochstein and Jeffrey Tenenbaum were granted a patent for "communicating live while playing the same video game in separate locations." The two sued Microsoft in 2004, claiming that Xbox Live infringes on their patent.
Microsoft's defense appears to hinge upon the claim that Xbox Live operates outside of the actual video game. Furthermore, Kotaku notes that the company has resorted to cheap tricks, including holding up the trial for weeks over a type and providing 140,000 documents on the plaintiffs without any index.
Sony was also sued by Hochstein and Tenenbaum over the PS2's network, but Sony settled the case for an undisclosed amount of money. Seems like the reverse of the lawsuit over rumble in controllers. In that case, Microsoft settled and licensed the tech to include rumble on the Xbox 360. Sony was the one that dragged the process out, finally releasing the DualShock 3 after settling the case.