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AOL has filed a 20-page lawsuit with the US District Court in Washington DC that argues that Netscape, which once rivalled Microsoft's Internet Explorer on the desktop of millions of PC users, suffered at the hands of the software giant and its unfair promotion of its browser.

AOL bought Netscape in 1999 and since then it has seen its Navigator browser lose ground to its more powerful rival Internet Explorer. Explorer came to dominate the market once Microsoft began bundling the browser with its Windows operating system. It was this bundling that led to the original court cases and the government lawsuit.

AOL has asked the courts for damages and also to stop Microsoft from doing any more harm to its Netscape product.

According to Randall Boe, AOL general counsel: "Netscape's lawsuit is a logical extension of the findings entered by the District Court and unanimously affirmed by the Court of Appeals that Microsoft thwarted competition, violated the anti-trust laws and illegally preserved its monopoly at Netscape's expense."

The case follows the decision of the US appeals court in June to uphold findings in the US Justice Department's case against Microsoft that the company illegally used its monopoly in personal computer operating systems to maintain its dominance.

The seven appeal judges upheld the finding of eight separate anti-trust violations by Microsoft. The Justice Department and nine states joining the government case have reached a proposed settlement, but nine other states are still holding out for stiffer penalties.

A hearing for the nine states is to be held in March, in which AOL is one of several companies due to testify on behalf of those states. The nine states are demanding that Microsoft sell a cheaper, stripped-down version of its Windows operating system as well as giving rivals Internet Explorer code so they can offer their own versions of the browser.

Microsoft spokesman Jim Desler said that while it had not seen the Netscape lawsuit and so could not comment on specific allegations but did say: "AOL purchased Netscape for $10bn, now AOL wants to blame Microsoft for Netscape and AOL's own mismanagement."

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