Class-action claims against Microsoft alleging that the Xbox 360 has a design problem that causes disc gouges can move forward, a federal appeals court ruled on Wednesday. The case, which dates back to 2007, claims that Microsoft "negligently designed and manufactured" the console.

The 9th U.S. Circuit Court of Appeals in Seattle decided (via Reuters) that a lower court judge misapplied the law in concluding that Xbox 360 owners should be barred from collectively suing for damages in the case. This week's legal decision reverses that decision, allowing for the possibility of a class-action suit.

Microsoft has sold more than 84 million Xbox 360s worldwide since the console debuted in November 2005.

Plaintiffs in this case allege that the Xbox 360 optical disc drive is "unable to withstand even the smallest of vibrations, and that during normal game playing conditions discs spin out of control and crash into internal console components, resulting in scratched discs that are rendered permanently unplayable."

Microsoft, on the other hand, argues that the vast majority of the Xbox 360 systems don't have any problems with scratched discs. In a statement, Microsoft said only 0.4 percent of systems are affected by disc-scratching. The company further argues that the main cause of gouged discs is actually consumer misuse, not a product defect.

"We've won in the lower court previously and believe the facts are on our side," a Microsoft spokesperson said. Attorneys for the plaintiffs, on the other hand, said they were pleased with the court's decision to allow the case to move forward.

The full court statement is available here.

This is not the first time Microsoft has faced legal action over reported problems with Xbox 360 hardware. Following the system's release in 2005, a man sued Microsoft over claims that the system had a design flaw that made it overheat. Microsoft has also faced legal battles concerning the Xbox 360's infamous "Red Ring of Death" hardware issue.

Looking to the new generation, Microsoft in summer 2013 updated the Xbox One terms of service to block class-action lawsuits against the company. Microsoft is not the only major game maker to forbid class-action lawsuits. Sony's PlayStation terms of service restrict gamers from suing the company en masse, while Valve also blocks class-action suits.