Update: Comet has issued the following response to Microsoft's statement which we've got for you in full, after the break.
"We note that proceedings have been issued by Microsoft Corporation against Comet relating to the creation of recovery discs by Comet on behalf of its customers.
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 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."
"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. "Comet's actions were unfair to customers. We expect better from retailers of Microsoft products - and our customers deserve better, too."
The suit charges Comet with producing the counterfeits in a factory in Hampshire and then selling the media to customers from its retail outlets across the U.K.
Comet is currently owned by French retail company Kesa Electricals PLC, although it is reportedly being purchased by private equity firm OpCapita LLP later this year.
With an emphasis on education, engineering and enforcement, Microsoft seeks to protect its customers from counterfeiting and piracy - and ensure people get what they pay for. If customers ever question the legitimacy of their software, be it a shrink-wrapped product or recovery media, they are advised to visit http://www.howtotell.com to learn more and, if they have any doubt, report the suspicious software to Microsoft.
Founded in 1975, Microsoft (Nasdaq "MSFT") is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.