* Judge grants permanent injunction in favor of i4i

* Bars Microsoft from selling 2003, 2007 Word versions

* Microsoft says will appeal (Adds detailed definition of XML)

BANGALORE, Aug 12 (Reuters) - A U.S. federal court's ruling in a patent infringement case could threaten sales of Microsoft Corp's MSFT.O popular word processing application.

A Texas district court on Tuesday ruled in favor of Canadian software firm i4i Ltd and filed an injunction preventing Microsoft from selling the 2003 and 2007 versions of Word.

The patent relates to the use of XML, or extensible markup language, which is used to make documents such as corporate earnings reports and news articles machine-readable and easily publishable on multiple platforms.

Apart from Microsoft’s Word, XML is used by other word processing applications such as OpenOffice.

The court also ruled that Microsoft would have to pay more than $290 million in damages to i4i, which makes software for manipulating documents, for infringing the patent.

Microsoft, which is involved in a number of legal battles over patents, said it plans to appeal the verdict.

“If they (Microsoft) decide to appeal, we will certainly follow it carefully and we will continue down the path to ensure that the judgement is upheld,” said i4i Chairman Loudon Owen.

Toronto-based i4i had claimed in a 2007 suit that Microsoft knowingly infringed one of its patents in its Word application and its Vista operating system.

“The verdict stops Microsoft from selling Word 2003 or Word 2007 with our technology in it within 60 days. So they have to either remove our technology or stop selling it,” i4i’s Owen said.

The final judgment from the U.S. District Court followed a jury verdict issued in favor of i4i on May 20. [ID:nN20530462].

“We believe the evidence clearly demonstrated that we do not infringe and that the i4i patent is invalid,” Microsoft spokesman Kevin Kutz said.

The case is i4i Limited Partnership and Infrastructures for Information Inc vs Microsoft Corp, U.S. District Court, Eastern District of Texas, Tyler Division, No. 6:07CV113. (Additional reporting by Saumyadeb Chakrabarty; Editing by Mike Miller and Anil D’Silva)