The violation is that Word stepped on an XML patent in both Word 2003 & Word 2007. They were ordered to stop all sales of Word 2007 by January 11th 2010 *OR* remove the part of the code that violates the patent. Microsoft chose the 2nd part. They've been fighting this in an appeals court for quite some time (April 2009) and already had made the arrangements to remove the XML, DOCX or DOCM extensions from tehir software. It doesn't prohibit them from creating their own XML etc, but the problem was that they were using some XML technology on their import & modifications part of Word.
Microsoft had already removed the code, saying that few people ever really used it, and have products ready to ship. They also produced code to REMOVE the infraction from existing software, however they are not ordered to remove the code from already sold versions. It'll be interesting to see if they push that code out in a software update 🙂
I guess this is just one more reason to push the Microsoft Office 2010 (and Word 2010). Shouldn't be too long before those products are out of beta and on the shelves!