At the same time it is fighting off pressure to license its Windows operating system source code to other companies as part of the EU antitrust lawsuit.
The US settlement, which has yet to be accepted by a trial judge and is still opposed by nine states, requires Microsoft to disclose technical details about its Windows server software.
In a written response to the European Commission's allegations that Microsoft has abused its dominant position in the operating-system market, Microsoft argued that compulsory licensing of its codes would breach international copyright law.
Microsoft filed its 102 page confidential reply with the European regulator on 16 November.
The reply was handed out to other companies involved in the lawsuit, including Sun Microsystems, whose complaint to the European competition regulator in 1998 sparked the investigation into the software maker.
It appears that Microsoft is focusing its defence in the European case on the fact that Europe has signed up to the international intellectual-property agreement known as Trade-Related Aspects of Intellectual Property Rights (TRIPS).
This agreement allows for compulsory licensing of patented codes if they are essential for interoperability with other products. However, it is less clear with copyright. Under TRIPS and US law, ideas, principles and methods of operation cannot be granted copyright. But there is a fine line between what can and cannot be copyrighted.
Microsoft faces fines of up to 10% of its global sales if the Commission finds it guilty of abusing its dominant position. It may also be forced to make structural changes to its business practices in order to allay the European Commission's concerns.
Commission spokeswoman Amelia Torres declined to comment on the leaking of Microsoft's written response.
Microsoft's senior counsel in Europe, John Frank, said: "I don't think it helps anyone to have selected quotes leaked."
Frank said that he and his team were "working to resolve the dispute" with European regulators.
The European Commission has set a 7 January deadline for comments from other companies involved in the case.