Microsoft yesterday finally won its four-year battle against being broken up after the US Court of Appeals threw out a lower courts ruling that the company should be split in two.

"The central issue in this case was the fundamental principle that every company must have the ability to innovate and improve its products," said Microsoft chairman Bill Gates after yesterday's hearing. "We're very pleased this ruling sets a higher standard for these issues than the lower court applied."

The unanimous decision by the seven appeals court judges, came as little surprise to many of the software giant's competitors.

But the majority of the illegal practice issues brought against the company were upheld as the court ruled the monopoly had acted illegally in an attempt to maintain control over the PC industry.

"We'll be making a review of our licensing provisions in light of today's decision," said Gates. "We will also continue to work hard to resolve the remaining issues without continued need for litigation."

But the court found Microsoft had not tried to monopolise the internet browser market, as the US government had claimed.

The appeals court frowned on statements made by Judge Thomas Jackson at the original hearing and ordered his removal from the case on the grounds of "serious judicial misconduct," after he publicly berated Bill Gates to New Yorker magazine.

Microsoft's punishment has yet to be decided, but the company has shown no sign of changing its 'monopolistic' behaviour throughout the case.