Toronto-based i4i filed a patent in 1998 describing a means for "manipulating the architecture and the content of a document separately from each other" using the magic of XML technology. Microsoft Word makes extensive use of this feature, and so does OpenOffice.org (but I guess more money can be squeezed out of Microsoft than out of Sun).
The court has ruled that Microsoft wilfully infringes said patent, and that it will have to pay a fine of 290 million USD. In addition, after 60 from the ruling, Microsoft wil have to stop selling, marketing, or providing support for Microsoft word 2003 and Word 2007.
Microsoft has already stated they will appeal the decision. "We are disappointed by the court's ruling," Microsoft spokesman Kevin Kutz said in a statement, "We believe the evidence clearly demonstrated that we do not infringe and that the i4i patent is invalid. We will appeal the verdict."
This has all the stink of your typical American patent troll case. The case was filed in the Eastern District of Texas by a Canadian company - the Eastern District of Texas is known for its patent litigation cases.