A federal court has reversed an earlier ruling that Microsoft's product activation technology infringed on another company's patent.
The new ruling overturns a $388m jury verdict, according to US media reports.
"We are pleased that the court has vacated the jury verdict and entered judgment in favour of Microsoft," a company spokesman said.
Microsoft initially won a summary judgment ruling after security firm Uniloc claimed Microsoft had used its security technology to earn billions of dollars.
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Uniloc appealed that ruling and a federal appeals court last year ruled that the case needed to go to trial, which found in favour of Uniloc.
Reversing the outcome of that trial, US district judge William Smith said the jury lacked a grasp of the issues and reached a finding without a legally sufficient basis.
Victory in the Uniloc case comes as Microsoft awaits the outcome of an appeal in another patent case in which the XML feature in recent versions of Word was allegedly found to infringe on patents held by Canada's I4i.
Earlier this month, the US Court of Appeals granted Microsoft's request to postpone an injunction banning the software company selling Word.
If Microsoft loses its appeal, the software company will face damages of $290m as well as an injunction that would halt sales of Word with the XML feature.