But, in a written decision favourable to the plaintiff, U.S. District Court Judge Janet Hall rejected Microsoft's motion to dismiss the case, Microsoft said.

That has set the stage for a trial in the case, which involves Danbury, Connecticut-based Bristol Technology Inc.'s expired agreement to license Microsoft source code -- the all-important blueprint that tells computer programmers how a software programme works.

"We are very pleased with the court's decision to deny the preliminary injunction," Microsoft spokesman Jim Cullinan told Reuters. He said the trial was expected to begin in June.

Redmond, Washington-based Microsoft jealously guards its source code, saying it is among the most valuable intellectual property it owns.

Bristol,founded in 1991, makes a product called Wind/U, which acts as a bridge between developers writing software for computers based both on Microsoft's Windows operating system and those based on Unix.

Bristol's original, three-year agreement to license source code from Microsoft expired in 1997. It argued that Microsoft, by withholding its latest source code, was trying to remove the Windows-Unix bridge and force developers to create applications only for Windows.

A copy of the judge's 60-page decision was not immediately available, and Hall's office refused to give any information over the telephone.

The private antitrust case is not connected to the suit filed by the US Department of Justice and 20 states in May, but it makes the similar claim that Microsoft is using its monopoly in the market for desktop operating systems to crush competition.

"This affirms our position that Bristol's position lacks merit," he said. "We look forward to proceeding on the case at trial, and believe this is just anattempt by Bristol to use the court to impose a contract on us that is more favourable than with Bristol's competitors."

The world's largest software maker, said it filed a lawsuit against the pair, charging they are infringing on trademarks for popular Microsoft products and misleading the public.

The company named Kurtis K. Karr and Kenny Brewer, who live near Brownsville, Texas, as defendants in a suit filed in federal district court in Houston.

"We tried to resolve this out of court," said Microsoft spokesman Adam Sohn. "They made an offer to sell us these things for tens of thousands of dollars. We said `no way.'"

The two men do business as Trademarkdomains.com and TexasRGV.com, which is operating as launchbase.com. Microsoft said the sites have registered at least 10 known domain names that infringe on its trademark rights.

Karr and Brewer weren't available for comment.

The launchbase web site lists many other domain names, such as grayhound.com, guidinglight.com andnetscapenavigator.com.

Microsoft is seeking unspecified damages, all profits from the sites and full possession of the domain names.

"We believe once the court has had a chance to review the facts," Microsoft senior corporate attorney Steve Aeschbacher said, "it will agree that the defendants' registration, offer to sell, and use of these domains is deliberately designed to be confusing to consumers and is a violation of federal and state trademark law."

Microsoft said that in addition, the defendants have registered and offered for sale domain names including AlamoRentaCar.com, CitibankMasterCard.com and Wall-Mart.com.

The registration of domain names has been a problem with many companies. In a practice dubbed "cybersquatting," some people register corporate names or trademarks in an attempt to profit by selling rights to the registered names to companies with the same names or branded products.

Others use a practice called "piracy" in which individuals rely on the familiarity or similar spellingof a company's domain name to drive traffic to a different site. Microsoft said this tactic has been made popular by many pornographic web sites.