The WGA program collects hardware and software data, delivering it to Microsoft servers. The stored information is then used to warn of possible piracy violations.

The lawsuit, filed in U.S. District Court in Seattle on Monday, alleges the program violates consumer protection laws in California and Washington state, and laws against spyware, invasive programs that surreptitiously collect data.

Introducing WGA, Microsoft now finds itself in a similar predicament as Sony BMG Music Entertainment, which late last year, provoked controversy by shipping 15 million music CDs containing invasive copy protection software that installed itself on buyers' computers without user consent and transmitted data. After a class-action suit Sony eventually compensated users who bought the affected CDs.

The suit against Microsoft contends the company mislead users in delivering WGA to computers, masking it under batches of monthly updates that often include critical security patches. The suit asks Microsoft to delete all data collected by WGA and provide users with the ability to remove the software from their computers, in addition to damages.

"In truth and in fact, Microsoft, in its efforts to maximize revenue through antipiracy measures, mislead consumers and the public as to the true nature, functionality and operation of its WGA," the suit said.

Earlier this month, Microsoft admitted a version of WGA under distribution as a "high priority" update was in fact a test version of the WGA software. In April, Microsoft stepped up the WGA program, adding a function notifying users if their copy of Windows wasn't valid and causing it to make frequent contact with the company's servers.

Users have also complained the software labels copies of Windows as counterfeits when the license may have been legitimately transferred to a different piece of hardware.

In response to user complaints, Microsoft released a new version of WGA this week allowing people to opt out of notifications. The update also changes the frequency with which the program contacts Microsoft to check the validity of Windows.