The Supreme Court on Thursday handed the company a stinging defeat in its long-running patent dispute with the software developer which sued in in 2007 claiming infringement of a patented technology Microsoft incorporated into Word 2003 and Word 2007.

In a unanimous decision, the court upheld the $290 million judgment leveled against Microsoft in 2009 saying essentially that it’s not the court’s place to recalibrate the standard for proof for patent validity.

“According to Microsoft, a defendant in an infringement action need only persuade the jury of an invalidity defense by a preponderance of the evidence. In the alternative, Microsoft insists that a preponderance standard must apply at least when an invalidity defense rests on evidence that was never considered by the PTO [Patent and Trademarks Office] in the examination process,” Justice Sonia Sotomayor wrote in the court’s opinion. “We reject both contentions.”

And if Microsoft has an issue with that, it needs to take it up with Congress.

“Not once, so far as we (and Microsoft) are aware, has [Congress] even considered a proposal to lower the standard of proof,” Sotomayor added. “…Any recalibration of the standard of proof remains in its hands.”

Microsoft said it was disappointed by the Court’s ruling. “While the outcome is not what we had hoped for, we will continue to advocate for changes to the law that will prevent abuse of the patent system,” a company spokesman said in a statement.

The decision is an important one not just for Microsoft, which now has a chance to challenge the judgment, but for patent law as well. In considering the company’s appeal, the court will examine the current legal standard for determining the validity of a patent, which presumes a patent is valid because it’s been approved by the U.S. Patent and Trademark Office.

Microsoft argues that standard is far too low. And supporters including Apple, Google, Intel and most likely anyone else who’s raised an eyebrow over a dubious USPTO patent approval agree.

“We are gratified by the Court’s decision,” David Howard, Microsoft’s deputy general counsel for litigation, said in a statement. “It’s a clear affirmation that the issues raised in this case are critical to the integrity of our patent system.”

“This is a very material step in our litigation against Microsoft. Put simply: i4i’s patent is clearly and unequivocally valid,” i4i chairman Loudon Owen said in a statement. “Even though Microsoft attacked i4i’s patent claims with its full arsenal, the Patent Office agreed with i4i and confirmed the validity of our ’449 patent.”

The XML technology covered by the patent might be “obscure,” as Microsoft (MSFT) has argued, but that doesn’t mean it’s not patentable. This being the case, Microsoft would seem to be liable for its transgression: Incorporating i4i’s “obscure” patented technology into Word 2003 and Word 2007.

A tough break for Microsoft, which was ordered last year to pay i4i $200 million for doing so.

The company’s only recourse now it seems is to appeal to the Supreme Court, something it appears to be considering, according to Director of Public Affairs Kevin Kutz. Said Kutz: “We are disappointed, but there still remain important matters of patent law at stake, and we are considering our options to get them addressed, including a petition to the Supreme Court.”

Microsoft said it has been preparing modified versions of the affected programs that should be ready when the injunction goes into effect on Jan. 11, allowing sales to continue without interruption. The company also indicated the ruling shouldn’t affect its highly anticipated Office 2010 software, due out next year. It also doesn’t affect copies of Word that have already been sold.

The U.S. Court of Appeals for the Federal Circuit on Tuesday affirmed a ruling in a case brought by i4i Inc., a Toronto-based technology company that convinced a Texas jury last May that recent versions of Microsoft Word infringed a company software patent that deals with manipulating the architecture of a document.

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Judge Leonard Davis of the U.S. District Court for the Eastern District of Texas ordered a permanent injunction yesterday that will ostensibly prohibit Microsoft (MSFT) from selling Word within 60 days. It’s the result of a lawsuit filed by Toronto-based i4i, which claims that Microsoft violated a patent it owns regarding XML files. Microsoft is also supposed to hand over $290 million in damages.

There are more details from SeattlePi.com (still extant!) and TechDirt. But the most salient point here is that this is a ruling on a patent lawsuit filed in eastern Texas, which generally exists in its own orbit when it comes to patent lawsuits. So odds that this one will stick are awfully low.

Other equally important news: This footage of a guy in a wetsuit zipping down a giant water slide, up a wooden ramp and flying hundreds of feet through the air before landing in a kiddie pool is not real. It’s just a viral ad for Microsoft Germany.

But it’s pretty cool.