On March 08, 2007 i4i sued Microsoft in the United States District Court for the Eastern District of Texas for patent infringement.  The judgement came back on August 11, 2009, and it didn't look good for Microsoft.

The patent infringement case dealt with and discussed the use and reading of XML files within Microsoft Word.  The Eastern District of Texas has been the main court for patent infringement suits for the last several years, having a speedier process and well versed judges.

The Court found that Microsofot "unlawfully infringed" i4i's patent (U.S. Patent No. 5,787,449) and awarded damages in excess of $277 million.

Naturally Microsoft will appeal the verdict, and the outcome, who knows, but at least for the time being, it doesn't look good for Microsoft.

You can find the original Complaint here.  And the Verdict here.