So I mentioned in my last post that The XPS documents were mostly 2-dimensional, but included layers. Adobe mentions a number of patents that are licensed royalty-free and non-exclusive for use in PDF viewers and publishing software, and one that *can't* be used in software that "consumes and/or interprets PDF files".
I guess that means that the lone patent there can't be used in a program that translates PDF files into something else. That's the best I can make of it.
I think it means that you can have a royalty-free license for use in developing a program that makes spec-compliant PDF files, but it has to only *make* PDF files, but not import, open, or display them. I'm trying to see if I can get Adobe to make that clear, but I'm pretty much nobody, so don't hold your breath.
So, that would mean that without a paid-for license, Microsoft would have to only develop a converter for Office, or would have to make it so that Office could not open existing PDF files, but only create new ones (or, of course, make an office suite that used PDF as its only file format).
I haven't seen that Word 2007 (beta 2) can open PDF files, which seems consistent with what the license seems to say, so I'm not quite sure what the trouble is. This article seems to say that Microsoft is dropping support for allowing saving to either PDF or XPS by removing the PDF option, although it will still be available as a downloadble patch.
For Vista, their decision is even less clear, since there was an option to save in XPS, but not PDF. Microsoft has decided to allow OEMs to drop some support for saving files in XPS format.
Microsoft even says (per the linked article above) that adding PDF-saving support was on solid legal ground, so the big mystery is still just that, a big mystery.