Microsoft unfairly labelled PCs "Windows Vista Capable" even when they could only run the most basic version of the operating system, according to a lawsuit filed last week.

Prior to Vista's release, Microsoft launched a marketing campaign that allowed PC makers to place a sticker on computers, telling buyers that they could upgrade to Vista when it became available. However, "a large number" of those PCs were only capable of running the Home Basic version of Vista, which lacks many of the features, such as media centre and enhanced graphics, that Microsoft advertises as included in Vista, the suite alleges.

The lawsuit, filed in Washington state, seeks class action status and asks for damages. The suit is looking for over $5 million and claims at least 10,000 people could be part of the class.

Many of the machines with the Vista label cannot run or poorly run Home Premium, the least expensive version of Vista that includes most of the heavily advertised features, the suit says.

In addition, when Microsoft later offered buyers of "Windows Vista Capable" computers free or reduced-price upgrades to Vista, the company offered Home Basic to many customers.

"In sum, Microsoft engaged in bait and switch - assuring consumers they were purchasing 'Vista Capable' machines when, in fact, the could obtain only a stripped-down operating system lacking the functionality and features that Microsoft advertised as 'Vista'," the suit reads.

Microsoft argues that it "conducted a broad effort to educate computer manufacturers, retailers and consumers about the hardware requirements to run different versions of Windows Vista," said Jack Evans, a Microsoft spokesperson, in a statement.

That program is well-documented and the information can still be found. The company will present this information and address other issues in the suit in court, he said.