Upholding an earlier decision by the Texas court, the US Court of Appeals Tuesday ruled against Microsoft in the patent infringement lawsuit filed against the company by the Toronto, Canada-based i4i Inc.

Noting that Microsoft’s Word 2007 and other Office 2007 products infringe on a patent held by the Canadian firm, the court ruling banned Microsoft from selling the contentious products by January 11, 2010. In addition, the court also ordered Microsoft to pay a $290 million fine.

In its ruling, the court said: “In this case, a small company was practicing its patent, only to suffer a loss of market share, brand recognition, and customer goodwill as the result of the defendant's infringing acts.”

I4i, which had filed the patent infringement lawsuit in 2007, had accused Microsoft of patent infringement pertaining to an XML editor built into Word. In August this year, the US District Court for Eastern Texas gave its verdict in favor of i4i, to which Microsoft had appealed.

However, despite the fact that the Appeals Court ruling has gone against Microsoft, there is a near negligible chance that Microsoft will stop selling Word 2007 and Office 2007 because it will likely roll-out the non-infringing versions of both Office and Word before the court’s January 11 deadline.

Moreover, the forthcoming Office 2010 and Word 2010 versions already steer clear of using the contentious technology.