Microsoft's claim that taking Word off the market for a few months will cause "irreparable harm" is probably stretching things. It will, however, greatly inconvenience customers.
Both parties in this patent case need to find a dollar solution to what is, in the end, a dollar problem. And do so right away.
I do not know whether Microsoft's XML transforms violated i4i's patent rights. I do know Microsoft seemed to anger the judge in the case, resulting in a harsher ruling than Redmond might have earned otherwise.
Unless it's i4i's goal to just make Microsoft's products go away--at least until they can be reformulated and made non-infringing--then making a deal is the best course. Microsoft should simply pay i4i for at least temporary use of the patent while the case continues through the courts.
If Microsoft ultimately loses, i4i keeps all the money. If Microsoft prevails, most of the money goes back to Microsoft. Most likely, I think, is the money will be a down payment on an eventual settling of the case.
The court should encourage such a settlement. Microsoft can afford the litigation and fines and is doubtless already developing non-infringing code. Taking Word off the market until such replacement code appears won't do irreparable harm, perhaps, but it will greatly inconvenience Microsoft's partners and, especially, customers, who would be denied support for the product as well.
One solution that partially sidesteps the issue would be for Microsoft to speed release of the supposedly non-infringing Word 2010, due next year. Non-infringing versions of Word 2003 and 2007 could follow later.
That, however, may be incentive for i4i to hold out for as much pain (and money) now as possible, knowing that the leverage value of its patent decreases once Word 2010 becomes available.
Still, customers didn't cause this problem and, dependent as we are on Microsoft Word, we shouldn't bear the pain of what is, after all, a pretty minor legal action. Microsoft needs to write a check, i4i needs to cash it, and we should all just move on.