A U.S. federal appeals court has upheld a $290-million US judgment against Microsoft Corp. in a patent case launched by Toronto-based i4i Inc., and issued an injunction that will prevent the sale of its popular Word software.

Microsoft's Windows 7 is demonstrated at the International Consumer Electronics Show in January. A U.S. court upheld a patent infringement suit against the company on Tuesday. (Paul Sakuma/Associated Press)

The court injunction is set to go into effect Jan. 11. The injunction is only against U.S. sales of the program on or after that date, and does not affect copies of the programs sold before the injunction goes into effect, Microsoft noted in a release.

Loudon Owen, chairman of i4i, told CBC News Network's Lang & O'Leary Exchange that the award could be made in a matter of days.

"Microsoft has already, in an earlier iteration and negotiation, agreed that within 15 days of any final determination they have to pay us," he said. "So they have a 15-day time period looming and we'll see if they appeal it to the Supreme Court or not."

The decision is an important step in protecting the property rights of small inventors from large firms with big legal budgets, i4i co-founder Michael Vulpe said, but the settlement only includes lost royalties and has no penalties to discourage large companies from wilfully infringing on the patents of small firms.

"So there are no disincentives to theft at this point in the system," he said. "Now there's a lot of debate in the United States and to some extent in Canada about patent reform, and hopefully one of the things that will come out of this is that the penalties for wilful infringement which Microsoft engaged in will actually be real penalties rather than them borrowing our money and i4i subsidizing Microsoft's continued success with Microsoft Word."

The ruling prohibits the sale of all currently available versions of Microsoft Word and Microsoft Office. Microsoft said it expects to have copies of the programs with a "little-used" XML editing feature removed by the injunction date, and early prototypes of the 2010 versions will not have the offending software included.

The injunction does not prohibit Microsoft from offering XML support for existing customers.

High court challenge possible

Microsoft had appealed a Texas jury verdict in favour of i4i. The jury found recent versions of Microsoft Word infringed on a software patent for XML editing. XML is an acronym for extensible markup language, a method of encoding data between programs.

The company also said it was considering its options, up to and including requesting a rehearing of the issue by the Federal Circuit Court of Appeals or even the U.S. Supreme Court.

Microsoft has said that it and the public will both suffer if Word goes off the market while the company devises a workaround. It's estimated that 500 million people worldwide use some component of Microsoft's Office suite of software.