Microsoft dismissed a lawsuit against a Czech firm it had accused of hosting command-and-control servers for a botnet it crushed.

Microsoft has reached a settlement with defendants Dominique Alexander Piatti and his company, dotFREE Group SRO, and will be dismissing the lawsuit against them. Writing in his blog Richard Boscovich, a senior attorney with the company's digital crimes unit, said that Piatti and his company, dotFREE, were among 24 defendants named in a lawsuit Microsoft filed in U.S. federal court last month as part of a takedown of the Kelihos botnet.

Microsoft used a court order to seize control of 21 domains where hackers had stashed the Kelihos command-and-control (C&C) servers. These included the cz.cc domain owned by Piatti, the CEO of Prague-based dotFREE. However Boscovich absolved Piatti of responsibility.

After looking at he evidence Microsoft believes that neither he nor his business were involved in controlling the subdomains used to host the Kelihos botnet. It looks like the Kelihos botnet controllers used the subdomain services offered by Piatti's cz.cc domain.

Piatti has agreed to delete or transfer to Microsoft the cz.cc subdomains that housed Kelihos C&C servers and will work with Microsoft on ways to prevent future abuse of dotFREE's free subdomains.