Way back in May, a patent infringement suit was filed by XML specialists i4i against Microsoft under the circumstances that Word's handling of.xml, .docx and .docm files was an infringement on i4i's patented XML handling algorithms. Although Microsoft did lose this case, the case against further sale of Microsoft Word was put on hold pending results of another appeal.
Unfortunately for Microsoft they lost again and it is expected that the company will appeal once more as well as submit a request for the injunction to be put on hold and taken to the Supreme Court or for Microsoft and i4i to settle. i4i isn't patent greedy or trying to tear down Microsoft or anything like that however.
i4i is a 30 person database design company which shipped one of the first ever XML plugins for Office. i4i is also credited with being responsible for revamping the whole USPTO database around XML so that it would be compatible with the 2000 version of Microsoft Word. The patents that i4i is suing over, surprisingly enough, do not cover XML itself. Instead they cover the specific algorithms used to read and write custom XML. This means all you OpenOffice users can breathe a sigh of relief because i4i stated that the law suit does not infringe. This is also good news for current Microsoft Office users because they, more likely than not, won't be affected. The suit is only intended to affect future sales of Office and Word.
Some more good news from Microsoft is that the company is working quickly to create versions of Microsoft Word 2007 and Microsoft Office 2007 that do not have the XML features, which Microsoft claims are "little-used", by the injunction date of January 11, 2010. Microsoft also stated that the beta version of Microsoft Office 2010, which is available for download, will not contain the technology covered in the suit. Microsoft is also considering another appeal so for now all we can do is wait and listen.
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