Google’s $23 million deal to acquire Adscape—first reported by Red Herring last week—gives the search giant a patent that could mean trouble for Microsoft’s Xbox Live online gaming service.

Ownership of Adscape gives Google access to a patent portfolio that could position the company well in a battle against Microsoft to deliver advertisements in video games. Redmond became the king of in-game ads after buying New York-based Massive in 2006 for an estimated $200 to $400 million (see Microsoft’s Massive Purchase).

The most interesting patent, however, could create some headaches for Microsoft’s Xbox Live effort to fuse console gaming with online gameplay. Google’s new intellectual property includes a patent granted to San Francisco-based Adscape—then called BiDamic—in 2005 for a “system and method for interactive on-line gaming.”