Microsoft loses $290M patent case over Word '07

NEW YORK (CNNMoney.com) -- A federal appeals court on Tuesday upheld a lower court's $290 million patent infringement ruling against Microsoft that will prevent the world's largest software maker from selling the current version of its popular Word program.

The injunction goes into effect on Jan. 11, but Microsoft said sales of Word will not be affected: The company will have a new version of the Word software available before that date that eliminates the feature in question.

"We have been preparing for this possibility ... and have put the wheels in motion to remove this little-used feature from these products," said a Microsoft spokesman. "Therefore, we expect to have copies of Microsoft Word 2007 and Office 2007, with this feature removed, available for U.S. sale and distribution by the injunction date."

Microsoft noted that Word 2010, which is scheduled for release early next year, does not contain the technology covered by the injunction.

The U.S. Court of Appeals for the Federal Circuit affirmed an August 2009 ruling by a Texas jury that found Microsoft in violation of a patent held by Toronto-based document collaboration firm i4i. After the jury ruled in favor of i4i, a U.S. District Court judge fined Microsoft $290 million and said that Microsoft could no longer sell Word 2003 or Word 2007, with the disputed feature that allows users to edit XML -- a computer code that instructs the computer how to display content in a document.

Microsoft had appealed the lower court's ruling, saying the i4i patent was invalid. The appeals court rejected Microsoft's claim on Tuesday, upholding the validity i4i's patent and the lower court's ruling that Microsoft willfully violated it.

"We couldn't be more pleased with the ruling," said i4i chairman Loudon Owen in a statement. "This is both a vindication for i4i and a war cry for talented inventors whose patents are infringed."

The injunction does not affect copies of Word that have already been sold, and Microsoft will be allowed to support those previous versions.

Shares of Microsoft (MSFT, Fortune 500) rose 1% Tuesday.