The dispute dates back to December 2001 when Microsoft filed a trade mark suit seeking to prevent Lindows.com from using the terms LindowsOS and Lindows.com, arguing that they infringe on its rights in Windows.
But the software giant suffered a defeat on Tuesday when the US District Court in Seattle ruled that the meaning of the term 'windows' should not be considered in its current day usage, but in the usage common at the time before Microsoft's Windows products were released onto the market – the period 1983 to 1985.
If 'windows' is found to be generic term, then it cannot be the basis for a trade mark.
The Court also ruled that once a word is declared generic it would continue to be generic, informing Microsoft that no amount of marketing around a generic word changes the generic state of the word.
The ruling is fundamental to Microsoft's case and so Judge Coughenour has allowed an appeal on the issue before the full case goes to trial.
The trial, originally scheduled for 1st March, has now been postponed.
Microsoft spokeswoman Stacy Drake told Law.com:
"We're very encouraged that the judge granted our request to ask the court of appeals to provide guidance before we go to trial".
"The rulings are a major victory for Lindows.com. Essentially, the Court's ruling confirms that a company, no matter how much money it spends, cannot buy a word out of the English language," said Daniel Harris, Lindows.com's lead trial counsel.
"These repeated filings by Microsoft are just another attempt to deplete our resources by dragging these legal proceedings on for as long as possible. We are looking forward to our day in court, when the mountains of evidence we have collected will be displayed to the jury" he continued.
Lindows has not been so successful in Europe, where courts in Finland, Sweden and the Benelux countries have granted temporary injunctions against the company, prohibiting them from distributing Lindows software.