America Online (AOL) has suffered a setback in the midst of its highly publicized fight with Microsoft over instant messaging.

A judge on Friday threw out a lawsuit that AOL filed against AT&T on December 24, 1998, for allegedly infringing on its intellectual property. In the suit, AOL claimed that AT&T was illegally using the terms "Buddy List", "Instant Messaging" and "You've Got Mail" in AT&T's instant-messaging service.

AOL can appeal against the judge's dismissal.

In January this year, AOL was denied a request for a temporary restraining order and preliminary injunction against AT&T. In April, AT&T lawyers asked for a summary judgment, whereby a judge makes a decision based on the facts of the case, without a full trial. A decision had been expected in June.

In recent weeks AOL has threatened legal action against Microsoft for creating software that lets users talk to their "buddies" who use AOL's instant-messaging products. But as the fur continues to fly in this high tech cat fight, it's clear AOL is trying to corner the instant-messaging market.

In an earlier interview, Joe Esposito, chief executive officer of Tribal Voice, maker of AT&T's instant-messaging software, criticized AOL's tactics. "AOL is trying to lock up the barn after the horse has been stolen," said Esposito. "They've figured out that communications technology like instant messaging is the key to winning customers - only they want to keep it to themselves."

AOL was unavailable for comment at the time of publication.