A number of products are excluded from the two companies’ agreement not to sue each other’s customers for patent infringement, and one of those products is hosted Office.

Novell on Friday published redacted versions of the three partnership deals it signed with Microsoft in November. One deals with technical collaboration, one with cross-selling, and one with patents.

The patent deal, which has proved most controversial, explicitly excludes a broad range of products and services, some of which are already offered, some of which are not.

The deal defines Other Excluded Products to include office productivity applications (word processing, spreadsheets, presentation software, etc.) of the Parties that are hosted by or running on a computer acting as a server for a connected client device.

Since neither company has such an offering on the market at present, this clause implies that either Microsoft or Novell, or both, is working on such a service. Microsoft, with its multibillion dollar Office empire, would be the more likely candidate.

The idea of Microsoft offering hosted versions of Office has been touted for at least the last 18 months, ever since Google started offering similar services and Microsoft launched its own Office Live site.

Office Live is not currently a hosted version of the client-side suite. Rather, it offers web space and email at the low end and collaborative workspaces for document sharing at the higher end.

But since the Live strategy was announced in late 2005, it has been generally considered a no-brainer that Microsoft would at some point start offering Office, in the usual meaning of the brand, via the web.

InformationWeek quoted a Microsoft insider in October 2005, when asked what applications Microsoft would offer as hosted services, as saying: Everything. Hosted Office. Everything hosted. But there has not been a great deal of news from the company since.

One reason hosted Office from Microsoft is considered inevitable is that Google has been making obvious plays for the market for at least a year.

Google’s Docs & Spreadsheets service, now part of Google Apps, offers Office-like collaborative word processing and spreadsheets functionality based on acquired and house-built technology. A Powerpoint-like service is believed next on the Google roadmap.

Hosted applications, supported by subscriptions and/or advertising are indeed a core part of Microsoft’s strategy, although the precise details about how the company plans to offer such tools are thin.

Ray Ozzie, the recently anointed successor to Bill Gates, has in recent weeks made noises about software and a service, re-coining the software as a service buzzword, suggesting that a purely web-based play may not be the Microsoft strategy.