Correction: they can’t settle this out, since it’s already been tried. What I meant was that MS will have to license the technology. And, having a favourable verdict on their pockets, i4i can demand quite a high royalty payment.
The alternative, for MS, will be to remove custom XML from their file formats. What would be the sensible thing to do, since there are people who say that, adding custom XML to XML files, it’s a moronic thing to do: XML is a structured standard. Adding custom XML inside it means it becomes a mess.
By the way, I think the article is wrong when it says that custom XML is something related with corporations. No, it’s something which resides on some of the more recent MS file formats. So, anyone saving on those formats, e.g. DOCX, the native Word 2007 file format, will be using custom XML.