A representative in Microsoft's Australian subsidiary confirmed that the company has taken legal action against Hong Kong-based Lik Sang.
Lik Sang's Web site has been offline for nearly two weeks, with a notice on the site blaming a server outage.
Lik Sang representatives could not be reached for comment, and Microsoft attorneys were unavailable to explain the exact nature of the legal action.
Lik Sang was one of the top worldwide retailers of mod chips, devices that, once soldered to a game console's main circuit board, disable security components. The chips typically allow a game machine to play legally and illegally copied discs, run unauthorized software and play game discs intended for other geographic regions.
Hackers haveto mod chips as a conduit for running homemade software on the Xbox, leading to development of programs such as an Xbox of the Linux operating system.
Lik Sang offered a variety of mod chips for the Xbox and Sony's PlayStation 2, along with game consoles with mod chips already installed by Lik Sang technicians. The company went into the manufacturing side of the mod chip business last August when it acquired OpenXbox, a mod chip design intended to allow upgrades.
Though mod chips have bothered the video game business for years, Microsoft has been particularly zealous in fighting them. The companythe Xbox's innards partly to deter hackers and has sought to a mod chip expert.