Microsoft lost an appeal concerning the class action status of the "Vista Capable" lawsuit. The 9th U.S. Circuit Court of Appeals rejected the software giant's appeal to strike down a lower-court ruling granting class-action status.

Intel and Microsoft, or, better said, Microsoft under pressure from Intel, have exchanged emails which led to lowering the graphics requirements of so-called "Vista Capable" computers. These machines were PCs which were running Windows XP at the time but were marketed as "capable" of running Vista, when the new OS became available.

Microsoft executive John Kalkman previously said, “In the end, we lowered the requirement to help Intel make their quarterly earnings so they would continue to sell motherboards with the 915 graphics.”

The long series of e-mails shows that both Microsoft and Intel agreed to more or less mislead customers buying cheaper PCs into believing that they could eventually run Vista on them. Unfortunately, these machines proved "capable" of running only the most stripped down version of Vista, which doesn't really offer anything appealing over Windows XP. Most notably, the Aero graphics interface cannot run on a system which doesn't have graphics muscle.

In February, U.S. District Judge Marsha Pechman ruled that the consumers may go ahead with a class action lawsuit against the software company Microsoft over “Vista Capable” advertising program. Introduced in 2006, Vista Capable program was initiated by Microsoft and its hardware partners in order to help the customers to make informed decision when buying a new PC and to maintain the sales of Windows XP systems during the 2006 holiday season. Windows Vista for consumers was launched in January 2007.

However, the lawsuit claims that the labeling system was “misleading” because many of those computers were not powerful enough to run all of Vista's features and they could run only the Home Basic version of Windows Vista.