Microsoft has lost its court case against Lindows, leaving the small company free to sell its Linux-based operating system capable of running Windows applications.

The Redmond giant had been pressing the judge to shut down Lindows.com and prevent the company from selling its product under the name LindowsOS.

Microsoft claimed that the name trod too close to its Windows trademark, but this week the judge threw the case out.

In a seven-page ruling, Judge Coughenour wrote that the "consuming public used the terms 'windows', 'window' and 'windowing' to refer to a type of graphical user interface" and that through "its own use of the evidence" Microsoft essentially admits that 'windows' is a generic term.

The judge bolstered his decision with quotes on the term 'windows' from Microsoft's own computer dictionary definition, as well as from Steve Ballmer's presentation on the release of Windows 1.0.

Referring to an earlier ruling in which a court denied Microsoft's motion for a preliminary injunction against Lindows.com, Judge Coughenour added that Microsoft had managed to raise "serious questions" about the validity of its Windows trademark.

Lindows chief executive Michael Robertson said: "Microsoft's attempt to intimidate Lindows.com through legal attacks is part of its ongoing war against any potential competitor.

"This time its strategy has not only failed, but has completely backfired with the Windows trademark now being put at risk and on trial."

Robertson added that Lindows would go ahead with a June release of preview software, and that the final version of LindowsOS will go on sale later this year "for one third of the cost of a comparable Microsoft offering".