The Premier League was today dealt a blow in its global fight against online piracy after a court in Israel threw out an attempt to shut down a pirate website that was showing live matches free of charge.

The league failed in a bid to force Israeli ISP Netvision and web portal Nana to reveal the identity of the Israeli owner of LiveFooty.org, a website that used servers based in the country to stream live footage of Premier League matches for nothing.

In a judgment that could set a worrying precedent for the Premier League, the Tel Aviv District Court ruled that it was a case of "fair use" since no profit was made from the broadcasts and that, in Israeli law, breach of "broadcasting" copyright only referred to cable or wireless transmission and not streaming over the internet.

The judge, Michal Agmon-Gonen, furthermore ruled that the site had important social aims – "watching sports events is socially important and should remain in the realm of mass entertainment, and not just be for those who can afford it" – and argued that those who view online were not damaging the revenues of broadcasters. She said they were mainly "those of small means or who are not sufficiently interested in sport to pay".

The Premier League had earlier tried to move the case outside of Israel but the judge blocked the move because the site is based in the country. She also ruled that the identity of the owner would not be revealed and claimed the Premier League had failed to prove any infringement of its rights because online broadcasts were different from television ones. The judge ruled that without clear laws regarding the internet, the court has to choose between the rights of copyrights holders and the rights of the users.

The league's lawyer, Meir Klinger, said of the judgment: "From first impression it looks without a base and wrong. We will appeal to the high court".

Research commissioned last year by a coalition of global rights owners, led by the Premier League and including Major League Baseball, the NBA and NFL, found that up to 1.5m viewers regularly watched football via 177 online illicit feeds.

The true figure is almost certainly now higher, given the growth of high speed broadband lines and the increased popularity of watching television over the internet.

The growth of the Premier League has been underpinned by the revenues from pay TV broadcasters in the UK and globally – the current deal is worth £2.7bn over three years, a figure almost certain to be topped by the next contract from 2010 – and it has been lobbying the government to take action against websites that allow viewers to watch games for nothing and argued that without a strong domestic lead it has less leverage with legislators abroad, most of which are based overseas, many of them in China. Rather than following the example of the music industry, which made enemies of its customers by suing them directly, the Premier League has preferred to employ a specialist company to shut down feeds as they spring up and go after the sites that host them in the courts.

The league will later this year face a challenge in the European courts, when UK publicans will argue that decoders bought elsewhere in Europe and imported are legal under free trade laws. That would allow them to show foreign football feeds and blow a hole in the league's policy of driving up prices by selling its rights on a market by market basis.