Microsoft has settled its legal spat with data networking firm Alacritech, which led to a court injunction stopping the "making, using, offering for sale, selling, importing or inducing others to use Microsoft's [forthcoming Windows API] Chimney or Longhorn software".

The suit centred on two alleged patent infringements in which Microsoft was accused of using Alacritech's session-layer interface control (SLIC) technology to speed up data transfer.

The settlement includes payment of undisclosed amounts to Alacritech and an agreement to develop the technology with Microsoft and Broadcom.

"Alacritech's SLIC technology architecture is a key component of next-generation scalable networking," said Larry Boucher, president of Alacritech.

"Today's agreement will help facilitate the widespread adoption of technology that is a key enabler of efficient data delivery."

According to Alacritech, Microsoft worked with the company for a year on SLIC technology. It then ceased contact and shortly afterwards announced that it would use similar technology in the forthcoming Longhorn operating system due out next year.

"Customers are looking for high performance, seamless and secure networking, and Microsoft's networking initiatives will advance the functionality and scalability of the Windows platform," said Jawad Khaki, vice president of Windows networking and devices at Microsoft.

"Today's agreement ensures that Microsoft customers and partners will be able to realise improved application, server and network performance."