By Elinor Abreu

SAN FRANCISCO (Reuters) - An Iowa lawyer on Friday vowed to push forward with a class action lawsuit against Microsoft Corp. MSFT.O after the state Supreme Court ruled consumers could sue the world's largest software maker for having been allegedly overcharged for Windows when they bought PCs.

The original lawsuit, filed in February 2000, accuses Microsoft of unlawfully "maintaining its monopoly power by anti-competitive and unreasonably exclusionary conduct" and artificially driving up the price of Windows 98.

"People who bought Windows 98 probably paid about $40 too much," said Des Moines attorney Roxanne Barton Conlin.

A lower court dismissed the lawsuit in August 2000, ruling that state law precludes consumers from suing software makers if they buy the software from PC manufacturers and not directly from the software companies, she said.

On appeal, the Iowa Supreme Court reversed that decision on Wednesday, saying nothing in the state law says that "in order to seek redress for antitrust violations a purchaser must be directly injured."

Two of the seven judges on the state's high court dissented.

Microsoft spokesman Jim Desler said the ruling conflicts with ones in state courts in New Hampshire, Rhode Island and Connecticut.

"The heart of these claims is wrong. Consumers have not been harmed by Microsoft," he said. "In fact, consumers have benefited from additional features and functionality in our products, that we have offered at low prices."

The Iowa Supreme Court decision held that 19 states allow indirect purchasers to file antitrust lawsuits, 17 others permit recovery on behalf of consumers in other ways and a total of 36 states recognize a cause of action for indirect purchasers.

MICROSOFT BATTLING FEDS TOO

The Iowa class action suit is separate from the landmark antitrust battle that Microsoft has fought against the Justice Department and 18 state attorneys general.

The company reached a settlement with the department and nine of the states last year. But nine other states -- including Iowa -- have refused to settle and are asking a federal judge to impose stricter sanctions on the company.

The Iowa ruling sets a precedent that will make it easier for the state to recover money for Iowa residents who have been overcharged in antitrust cases, said Bob Brammer, a spokesman for Iowa Attorney General Tom Miller.

"This a very important decision that helps consumers...to have a cause of action in case of price fixing or other antitrust activities," Brammer said.

Dozens of other class-action lawsuits are pending against Microsoft around the country, filed in the wake of a federal district court ruling that concluded the company was a monopolist that had violated federal antitrust laws.

Microsoft unsuccessfully tried to reach a nationwide settlement of the state cases last year, Desler said.

The Iowa lawsuit estimates there are at least 20,000 Iowans who purchased Windows 98.