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The case originated in 2002, when Burst claimed Microsoft had infringed its patents for optimising audio and video streaming. It claimed that Microsoft had contacted the company to license the technology and courted a relationship over two years and seven meetings without actually licensing anything, with the result, said Burst, that Microsoft simply lifted the technology into Windows media.

Both parties are claiming victories now, though. 'While we were confident of prevailing in this lawsuit, we have been open from the beginning to finding a reasonable way to resolve this case,' said Tom Burt, corporate vice president and deputy general counsel

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for Microsoft. 'Securing a license to the Burst patent portfolio through this settlement allows us to focus on the continued development and deployment of Windows Media technologies to deliver the ultimate media experience to our partners and customers.'

And Burst's co-Founder, Chairman and CEO, Richard Lang, said: 'We spent over a decade developing and patenting the technology in anticipation of the markets that are now emerging. Microsoft taking a license validates the innovation of the burst technology embodied in the underlying patent portfolio. With this action behind us, the company can now focus on its other opportunities.'

Shares in Burst rocketed 75 per cent to $3.15 on the news on Friday.

One of the striking features of the Burst case was that when Burst's lawyers received Microsoft emails related to the negotiations during the discovery period of the case, they found a 35 week gap in the submission, which Microsoft explained had been erased from the servers as the technology wasn't important. Yet in a concurrent case against Sun, Redmond stated that all emails were backed up and kept off site. The judge subsequently ordered Microsoft to go find them, and clearly they may have been of some benefit to Burst.