A U.S. court of appeals on Tuesday upheld a $290 million jury verdict against Microsoft Corp for infringing a patent held by a small Canadian software firm, and affirmed an injunction that prevents Microsoft from selling versions of its Word program which contain the offending software.

The ruling, by the United States Court of Appeals for the Federal Circuit -- which handles many patent and trademark cases -- may signal the endgame of a long-running dispute between Microsoft and Toronto-based i4i Ltd.

On August 12, a jury in a federal U.S. district court in Texas ruled in favor of i4i Ltd against Microsoft, for infringing a patent relating to the use of XML, or extensible markup language, in the 2003 and 2007 versions of Word.

The jury slapped more than $290 million in damages on Microsoft and the court granted i4i's motion for an injunction preventing the world's top software company from selling versions of Word that contain the disputed patent technology.

That injunction was stayed while Microsoft appealed the case with the Court of Appeals. According to Tuesday's ruling, which upheld the injunction, Microsoft will be prevented from selling infringing versions of Word from January 11, 2010.

However, industry experts say the most likely outcome is a settlement between the two parties that allows Microsoft to pay a royalty to i4i and continue selling Word.

I4i is especially pleased with the court's decision to uphold the injunction, an important step in protecting the property rights of small inventors, said Michel Vulpe, founder and co-inventor of i4i, in a statement.

Microsoft would not immediately comment on the matter.

The case is: i4i Limited Partnership and Infrastructures for Information Inc v. Microsoft Corp, an appeal from the U.S. District Court for the Eastern District of Texas in case no. 07-CV-113.

(Reporting by Bill Rigby, editing by Matthew Lewis)

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