'Vista Capable' suit against Microsoft allowed to proceed

Microsoft had asked that all claims be dismissed

A judge in Washington state has denied Microsoft Corp.'s request to dismiss all claims in a suit alleging that the "Windows Vista Capable" stickers the company put on PCs violated consumer protection laws and were an example of deceptive business practices, allowing the case to move ahead toward a jury trial.

In the U.S. District Court for the Western District of Washington in Seattle, Judge Marsha J. Pechman dismissed one of four claims by plaintiff Dianne L. Kelley in a lawsuit against Microsoft over the stickers, which Microsoft -- in conjunction with PC makers -- affixed to PCs that were sold before Windows Vista itself was available to give consumers an idea about which machines could run the operating system.

The suit also calls into question the fairness of Microsoft's "Express Upgrade" coupon program that allowed users to upgrade to Vista from XP machines for little or no cost after buying a "Windows Vista Capable" computer.

According to court papers, Pechman is allowing two of the plaintiff's claims to move into the trial phase of the case. One alleges that Microsoft violated the Consumer Protection Act by engaging in unfair or deceptive business practices by affixing the labels to PCs without telling consumers that they might have to spend more money for a machine to run a premium edition of the operating system. Another alleges that Microsoft unjustly received payment for Windows XP licenses and upgrades from Vista Basic to Vista Premium because of their practices.

Pechman dismissed one claim, which called Microsoft's placement of "Windows Vista Capable" stickers on PCs that could not run all versions of Windows Vista a "breach of contract." Another claim -- that a "Windows Vista Capable" sticker represents a written warranty under federal law -- has been taken under advisement by the judge, which means she will decide later how to proceed on that claim, Microsoft said.

The case is scheduled to go to trial on Oct. 8.

Microsoft's hardware partners began shipping PCs with the "Windows Vista Capable" logo in April 2006 as a way for people to know that if they purchased a new Windows XP PC before the new operating system was available, their machines would be ready to run Vista. However, the designation was potentially confusing, because a PC with the label was guaranteed to run only the least expensive, most basic version of Vista, Windows Home Basic.

A month later, Microsoft launched a Web site to explain the hardware requirements for different versions of Vista, as well as a new PC designation called "Windows Vista Premium Ready," which the company used to label PCs that could run other editions -- such as Vista Home Premium and Vista Ultimate -- with more features than Vista Basic. Microsoft also provided coupons for people who purchased these PCs to upgrade to the appropriate version of Vista either for free or for little cost once the operating system was available.

Kelley filed her suit against Microsoft in March as a class-action case, but whether the suit applies to an entire class of people with similar complaints has not yet been determined.

Kelley, a resident of Camano Island, Wash., purchased a PC with a "Windows Vista Capable" sticker affixed to it last November. In her complaint, she said that Microsoft was "deceptive" in its failure to indicate that the PC lacked the "Premium Ready" designation. Kelley also claimed that the upgrade she received for her PC only allowed her to upgrade to Vista Home Basic, which offered "few ... advantages over the existing XP operating system." Therefore, consumers were duped into thinking they would receive coupons for a "dramatically new" operating system when they could not, according to her complaint.

Microsoft spokesman Guy Esnouf said the company is pleased that one of the claims in Kelley's complaint has been dismissed and looks forward to proving its case in court.

Copyright © 2007 IDG Communications, Inc.

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