A federal judge last week dismissed a three-year-old lawsuit that accused Microsoft of duping customers when it fed them company anti-piracy software as a critical security update, court documents show.

U.S. District Court Judge Richard Jones dismissed the case last Friday, a day after the plaintiffs and Microsoft agreed to drop the lawsuit.

"We are pleased this resolved successfully," said Kevin Kutz, director of public affairs for Microsoft.

Last month, Jones denied several motions by the plaintiffs, including one that would have given them a third chance to turn the case into a class-action lawsuit. That essentially put an end to the action, and ensured Microsoft would not face millions in potential damages.

In June 2006, Microsoft pushed its Windows Genuine Advantage (WGA) anti-counterfeit software to Windows XP as a "high priority" update that was automatically downloaded to and installed on most machines. Microsoft relies on WGA, and its successor, Windows Activation Technologies (WAT), to detect bootlegged copies of Windows. If the software sniffs out a counterfeit, it posts nagging messages on the screen.

Multiple lawsuits filed in July 2006 claimed that Microsoft mislead users by labeling the WGA software as a security update, and failed to tell customers that WGA collected information from their PCs, then frequently "phoned home" the data to Microsoft's servers. The plaintiffs later combined their cases and asked the court to grant the joint lawsuit as a class-action.

Full story: Computerworld