Microsoft has lost the first round in a legal battle over whether its Windows Vista Capable and Express Upgrade programs were deceptive and led consumers to buy PCs that could only run the most basic version of the operating system.

The case was brought against the software giant, based in Redmond, Wash., by lead plaintiff Dianne Kelley of Camano Island, Wash. Kelley bought a new PC in November 2006 that had a sticker labeled "Windows Vista Capable" affixed to it.

Windows Vista had not been released at that time, so customers bought machines with Windows XP preloaded and were given a coupon that allowed them to upgrade to Vista when the operating system was released at the end of January 2007.

Kelley then discovered that her machine was only capable of running Vista Home Basic, which does not include the new Aero user interface, advanced graphics and other "signature" features available in Vista Home Premium and other more advanced, and more expensive, versions of the product.

Kelley sued, claiming that Microsoft's marketing violated the Consumer Protection Act, was unjustly enriched and violated federal warranty law. She also sued for breach of contract, a claim she subsequently voluntarily dismissed.

Read the rest of this eWEEK story: "Windows Vista Capable Lawsuit Continues"