Software maker Novell Inc can proceed with a long-running antitrust lawsuit against Microsoft Corp after an appeals court reversed a lower court's summary judgment in favor of Microsoft.

Novell, which was bought by Attachmate Corp earlier this year, claimed that its operating system products and several of its software applications were unfairly squeezed out of the market by Microsoft in the 1990s.

In 1996 Novell made a deal assigning rights to sue Microsoft to a separate company called Caldera, which sued Microsoft over competition in the operating system market, receiving a $280 million settlement four years later.

In 2004, Novell sued Microsoft in its own right, claiming its WordPerfect word processing application was the victim of unfair competition by Microsoft, chiefly through its arrangements with computer makers.

Last year, Microsoft won a summary judgment against Novell on the grounds that Novell's claims were subject to the 1996 agreement with Caldera, which relinquished the right to sue Microsoft.

The appeals court reversed that judgment in a ruling on Tuesday, in a 2-1 majority decision, saying that the previous agreement with Caldera covered a different set of products.

The ruling means Novell can proceed with one remaining antitrust claim against Microsoft.

A representative for Novell did not immediately respond to a request for comment.

Microsoft played down Novell's claims and said it was considering its next move.

We are disappointed with the Fourth's Circuit's decision ... although we are pleased that at this point only one part of one of Novell's claims remains, said a Microsoft spokeswoman. We still are convinced that this lingering claim does not have any merit, and we are considering our next steps.

The case is Novell Inc v Microsoft Corp, number 10-1482 in the United States Court of Appeals for the Fourth Circuit.

(Reporting by Bill Rigby; Editing by Richard Chang)

Intellectual property law Microsoft Lawsuit