The Danbury, Connecticut-based company, with just 70 employees and $8.7 million in revenues last year, sued Microsoft in August, claiming that the industry leader was trying to crush competition by preventing access to its source code -- the software blueprints -- for Windows NT. Bristol spent more than $1 million to prepare its case for trial.

After a federal jury in Bridgeport rejected Bristol's antitrust claims Friday, the company's lawyers were crestfallen. "We're extremely disappointed and surprised, and will be exploring all of our options," said attorney John Altieri.

"We still firmly believe that Microsoft engaged in anticompetitive behavior against Bristol, and that Microsoft is attempting to monopolize additional operating system markets," said BristolChief Executive Officer Keith Blackwell.

The jury did find that Microsoft committed a deceptive act that violated the Connecticut Unfair Trade Practices Act. The panel didn't specify what the act was, and awarded Bristol just $1 in damages. Steven Aeschbacher, senior corporate attorney for Microsoft, called the verdict "an important victory for the whole software industry."

"This protects the rights of people who developed intellectual property to be able to license it in a fair and equitable way," he said. Antitrust experts said Microsoft's victory was clearly important but was expected to have little impact in the much larger antitrust case in Washington, D.C., brought by the Justice Department and 19 states.

The government contends that Microsoft illegally wielded monopoly power from its dominant Windows product to expand into new markets, such as Internet software, and thus crush competitors. "It's a boost to the company principally because it's going to discourage other private parties from takinga swing at it for the same type of behavior," said William Kovacic of George Washington University.

"It will slow down others who thought it was time to pile on." Connecticut Attorney General Richard Blumenthal said the verdict has no bearing on the legal claims made by the states in the Justice Department case.

He said Microsoft's "monopolistic abuses" have "shortchanged customers and stifled competition in the industry." "We continue to be optimistic about prevailing in our action," Blumenthal said.