Both Office XP and Office 2007 have shipped with its own validation mechanism that unlike the one built in Windows, is meant to be more resilient, almost like it wasn't even there.
But Microsoft is preparing to turn on the switch and launch a pilot program initially limited to Chile, Italy, Spain and Turkey, where pirated copies of Office will start displaying notifications telling the user their copy is not genuine. Microsoft will limit the user's ability to use templates and optional downloads, but will not impair or limit usage of the applications from its core functions.
It's not completely clear what will happen after the first 30 days of notifications however. The software giant may decide to make the suite inoperative after a certain period, but that has not yet been confirmed.