A U.S. federal appeals court upheld a ruling against Microsoft Corp. Tuesday, ordering the software giant to pay $290 million to Canadian software firm i4i Inc. in a long-running patent dispute.

The court injunction will also prevent the sale of Microsoft’s popular Word product after patented i4i material was found in the company’s word processing software.

The ruling will prohibit the sale of all currently available Word and Microsoft Office 2007 editions after Jan. 11.

“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 i4i founder Michel Vulpe in a statement.

Microsoft had appealed an earlier decision by a Texas jury that voted in favour of Toronto-based i4i for infringing a patent related to the use of XML, or extensible markup language.

“We have been preparing for this possibility since the District Court issued its injunction in August 2009 and have put the wheels in motion to remove this little-used feature from these products,” Microsoft said is a statement following the ruling.

The ban does not apply to copies of Microsoft software sold before the injunction takes effect or copies of Microsoft Word 2010.

Experts have suggested Microsoft may opt for a settlement with i4i that could include paying the Canadian software maker royalties in exchange for selling current versions of its 2007 Word products.