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 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.
Engadget: Helping you flame with accuracy.
Update: Microsoft says it's moving quickly to prepare versions of Office 2007 and Word 2007 that don't have the "little-used" XML features for sale by January 11, and that the Office 2010 beta "does not contain the technology covered by the injunction," which can be read in a number of ways. It's also considering an appeal, so we'll see what happens next.