Microsoft unfairly labelled PCs ‘Windows Vista Capable’ even when the PCs could only run the most basic form of the operating system, according to a US lawsuit filed against the software giant.

Prior to the availability of Vista, Microsoft launched a marketing campaign that allowed PC makers to place a sticker on computers alerting potential 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 Center and enhanced graphics, that Microsoft advertises as included in Vista, the suite alleges. See PC Advisor's Windows Vista review for further details.

The lawsuit seeks class action status and asks for damages. The suit notes that the amount in controversy exceeds $5m and that the size of the class likely exceeds 10,000 people.

Many of the machines – included systems sent to PC Advisor last year - with the Vista label cannot run or poorly run Home Premium, 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 Vista 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. That programme is well-documented and the information can still be found online. The company will present this information and address other issues in the suit in court, he said.

See PC Advisor's review of Windows Vista and discuss the Windows Vista-capable controversy here.