In what must come as an unwelcome stocking gift to CEO Steve Ballmer this holiday, a Federal Circuit Court has upheld a ruling that will prevent the software giant from selling new copies of its Word word processor (ugh) due to a patent infringement.  From the engadget posting:

If you’ll recall, Microsoft lost a patent infringement suit against XML specialists i4i back in May when it was found that Word’s handling of .xml, .docx, and .docm files infringed upon i4i’s patented XML handling algorithms, but the injunction against further Word sales was put on hold pending the results of this appeal. Now that Microsoft has lost once again, we’d expect either another appeal and request for the injunction to be stayed, this time to the Supreme Court, or for a settlement between these two that would end this whole mess right now. We’ll see what happens — stay tuned.

P.S.- Just to be clear on this, i4i isn’t a patent troll — it’s a a 30 person database design company that shipped one of the first XML plugins for Office and was actually responsible for revamping the entire USPTO database around XML to make it compatible with Word back in 2000. What’s more, the patents involved here don’t cover XML itself, but rather the specific algorithms used to read and write custom XML — so OpenOffice users can breathe easy, as i4i has said the suite doesn’t infringe. Existing Office users should also be fine, as only future sales of Word are affected by the ruling, not any already-sold products.

Microsoft going to be barred from selling Word - General Tech  1

What does this mean for future Office software?  MS is already at work on an update to work around the patent infringement as well as stating that the Office 2010 beta does NOT have these legal issues attached to it.  Current users of Word are not going to be asked to promise to stop using the software, which is good news.