A federal judge on Monday dismissed a lawsuit filed in August by several California cities and counties accusing Microsoft of overcharging for its products.

In the class action case, the cities and counties accused Microsoft of unfair anticompetitive behavior and unfair business practices in violation of California law. The governmental entities sought monetary damages.

U.S. District Judge Frederick Motz of the U.S. District Court for the District of Maryland on Monday granted a motion by Microsoft for dismissal of the lawsuit. Motz dismissed the case because government agencies can't sue under one of the laws they invoked and because they were seeking damages over too broad a time period, according to the judge's opinion.

"Today?s decision granting Microsoft?s motion to dismiss is welcome news," said Microsoft spokeswoman Stacy Drake in a statement sent via e-mail.

Although the case was dismissed, the judge did give the plaintiffs permission to amend the antitrust part of their claims. "I would characterize this as a minor setback," said Matt Dorsey, a spokesman for the office of the San Francisco City Attorney, one of the plaintiffs. "We will be consulting with our fellow plaintiffs, but we are committed to go forward with the case on antitrust claims."

The lawsuit is similar to an earlier class action suit filed on behalf of California consumers. That suit ended in a $1.1 billion settlement reached in January 2003. Under the settlement terms, Microsoft agreed to provide vouchers to California consumers who purchased Microsoft products between 1995 and 2001.

The suit dismissed Monday was brought up on Aug. 27, 2004, by the counties of Santa Clara, Los Angeles, San Mateo, San Francisco and Contra Costa as well as the City of Los Angeles and the City of San Francisco.