The Redmond giant claimed Comet produced the counterfeit recovery CDs for Windows Vista and XP in a Hampshire factory before selling them in stores across the country.
"As detailed in the complaint filed today, Comet produced and sold thousands of counterfeit Windows CDs to unsuspecting customers in the United Kingdom," said David Finn, associate general counsel, worldwide anti-piracy and anti-counterfeiting at Microsoft.
... customers had been adversely affected by the decision to stop supplying recovery discs with each new Microsoft operating system based computer.
"Comet's actions were unfair to customers. We expect better from retailers of Microsoft products and our customers deserve better, too."
Microsoft advised anyone concerned they may have any counterfeit software, including recovery CDs, to head to its How to Tell page.
Comet admitted to creating CDs but said it does not believe it has infringed on Microsoft intellectual property.
"Comet has sought and received legal advice from leading counsel to support its view that the production of recovery discs did not infringe Microsoft's intellectual property," Comet said in a statement.
"Comet firmly believes that it acted in the very best interests of its customers. It believes its customers had been adversely affected by the decision to stop supplying recovery discs with each new Microsoft operating system based computer. Accordingly Comet is satisfied that it has a good defence to the claim and will defend its position vigorously."
The news comes at a difficult time for Comet, which is in the process of being sold to private equity firm OpCapita.
Kesa Electricals decided to sell the business for just 2 in November last year and, according to the Guardian, is handing over another 50 million to OpCapita just so it can get rid of Comet.
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Tom Brewster is currently an associate editor at Forbes and an award-winning journalist who covers cyber security, surveillance, and privacy. Starting his career at ITPro as a staff writer and working up to a senior staff writer role, Tom has been covering the tech industry for more than ten years and is considered one of the leading journalists in his specialism.
He is a proud alum of the University of Sheffield where he secured an undergraduate degree in English Literature before undertaking a certification from General Assembly in web development.