Microsoft is hoping that the future will hold fewer court cases

It struck the deal with California based InterTrust Technologies, a maker of software to protect online delivery and payment for films and music.

The agreement comes one week after Microsoft paid $1.6bn to a rival, Sun Microsystems, to end a patents battle.

The deal with InterTrust settles all the outstanding disputes with Microsoft and grants it software licences.

Tidying up

According to Rupert Goodwins of ZDNet UK, Microsoft wants to bring to an end a number of legal battles so it can concentrate on developing new markets.

Investors also have been pushing for an increase in the company's dividend payments and sales growth.

Microsoft previously had said that it would leave its annual dividend unchanged because of the ongoing court cases.

InterTrust, which is part-owned by Sony and Philips, sued Microsoft in 2001 after licensing talks collapsed.

The company accused Microsoft's new Windows XP program of infringing its patents and demanded damages that, at the time, were expected to run into billions of dollars.

Marshall Phelps, one of Microsoft's lawyers and a company vice-president, said that the settlement with InterTrust was aimed at providing "peace of mind for our customers and partners by letting them know patent licensing is our responsibility".

Penalties

Microsoft still faces one lengthy court battle after it decided to appeal against the European Union's decision that it had abused its dominant market position.

Following last month's ruling, the EU hit Microsoft with a record fine of more than $600m.

The company, however, should have no trouble paying its settlements or fines as it has a cash pile of more than $50bn.