INTERNET service provider iiNet has won a major legal battle over whether it should be held responsible for its customers downloading content illegally.

The case, against the Australian Federation Against Copyright Theft, could have had major implications for the way internet providers police their users.



If AFACT had won, providers would likely have been forced to penalise or disconnect users who illegally downloaded copyrighted material such as movies and songs.



However Federal Court judge Justice Dennis Cowdroy today found iiNet was not responsible for the infringements of its users.



"It is impossible to conclude that iiNet has authorised copyright infringement... (it) did not have relevant power to prevent infringements occurring," Justice Cowdroy said in his judgment.



Justice Cowdroy recommended the application be dismissed and that AFACT pay the court costs.



In a statement released shortly after the decision, iiNet welcomed the ruling.



"This case has been important, not just for iiNet, but the entire internet industry," it said.



"We do not, and never have supported, encouraged or authorised illegal sharing or downloading of files in breach of the copyright laws."



AFACT hit back by saying the ruling hinged on a technicality.



"We believe this decision was based on a technical finding centred on the court’s interpretation of the how infringement’s occur and (iiNet's) ability to control them," said executive director Neil Gane.



"We are confident that the Government does not intend a policy outcome where rampant copyright infringement is allowed to continue unaddressed and unabated via the iiNet network."



Mr Gane said AFACT would review the decision before deciding how to proceed. It is expected to appeal the decision in the High Court.



AFACT was representing in the case a group of movie and TV studios including Village Roadshow, Universal, Warner Bros, Paramount, Sony Pictures and the Seven Network.