Judge Leonard Davis of the U. S. District Court in Tyler, Tex., issued a permanent injunction barring Microsoft from selling Word in the United States -- upholding an earlier jury verdict in the case -- and ordered the world's largest software company to pay i4i nearly US$290-million in damages.

While the decision represents a devastating blow to one of Microsoft's flagship software lines and could result in millions of dollars in lost sales for the company, the David and Goliath victory has thrust i4i and its 30 employees into the international spotlight.

"This is a Canadian entrepreneurial victory versus giant Microsoft in what is a highly strategic area of the IT industry," said Loudon Owen, i4i's chairman for the past 13 years.

According to court documents, i4i claimed Microsoft infringed on a patent it filed in 1998 pertaining to the use of technology that can open documents using the XML computer programming language when the Redmond, Wash.-based company created its Word 2003 and Word 2007 software.

The permanent injunction "prohibits Microsoft from selling or importing to the United States any Microsoft Word products that have the capability of opening . XML, . DOCX or . DOCM files (XML files) containing custom XML."

"It's a landmark decision," said Mr. Owen, whose venture capital firm, McLean Watson, was the original investor in i4i.

"In my opinion, the permanent injunction is the biggest and most significant achievement."

Microsoft said it plans to appeal the verdict, however the judge denied the company's request for a stay against the injunction. Microsoft now has 60 days to comply with the judge's ruling.

"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."

Along with Windows itself, Word is part of one of the most important and lucrative software lines for Microsoft. Word is a key component of Microsoft's Office productivity software package, which also includes programs such as Excel, Outlook and PowerPoint.

Last year, sales of Microsoft Office accounted for 90% of the $18.9-billion generated by the company's Microsoft Business Division, nearly one third of the software giant's entire $60.4-billion 2008 revenue total.

Founded in 1993 by Michael Vulpe and Stephen Owens -- co-owners of the technology patent at the heart of the Microsoft dispute -- i4i, or Infrastructures for Information Inc., specializes in technology that allows customers to transform documents into

so-called "living databases," which make the information they contain easier to search, index and recall.

The pair's first office was down the hall from the change room of a massage parlour.

For more than 20 years, Mr. Vulpe has been travelling the globe, helping institutions such as the Smithsonian and the Vatican to organize and make sense of their mountains of documents. His system allowed such organizations to catalogue and store various treasures, artifacts and bits of data in a uniform way.

Mr. Vulpe took what he learned from cataloguing the more than 130 million artifacts stretched over nearly 20 museums at the Smithsonian and attempted to find a way to monetize his creation when he returned to Canada in the early 1990s.

Today, i4i's technology -- which runs so deep inside the IT departments of his clients' companies that many executives barely know it exists -- helps many pharmaceutical companies ºand organizations such as the U. S. Food and Drug Administration, produce their documents in a standardized manner that allows them to be sorted and retrieved quickly. "We feel vindicated with this result," Mr. Vulpe said in a statement yesterday.