What: iiNet Limited (ASX: IIN) has won a landmark legal case against 34 International and Australian companies, including Village Roadshow, Universal Pictures, Warner Bros, Sony Pictures, Disney and the Seven Network. The High Court of Australia dismissed their claims that iiNet authorised its users to download thousands of illegal film, TV and music files through the BitTorrent peer-to-peer file sharing system.

The High Court also observed that iiNet had no direct technical power to prevent its customers from using the BitTorrent system to infringe copyright. iiNet’s power to prevent its customers from infringing the appellant’s copyright was limited to an indirect power to terminate its relationship with its customers.

So What: This result sets a precedent for other Australian Internet Service Providers (ISPs), such as TPG Telecom Ltd (ASX: TPM), Telstra Limited (ASX: TLS), Optus, a subsidiary of Singapore Telecommunications (ASX: SGT) and iPrimus – now owned by M2 Telecommunications Limited (ASX: MTU). They can all now breathe a sigh of relief that they cannot be held liable for their users’ infringement of copyright, will no longer be exposed to damages claims that could have run into the millions, and not be liable to enforce restrictions on illegal downloads.

Now What: If the share prices of the above-mentioned ISPs were held back over concerns around the results of the case, they have been set free. Although in early lunchtime trading shares were mixed, with iiNet shares up 5 cents to $3.08, SingTel up 1 cent, M2 down 3 cents while Telstra and TPG were flat.

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Motley Fool contributor Mike King doesn’t own shares in any of the companies mentioned. The Motley Fool’s purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Click here to be enlightened by The Motley Fool’s disclosure policy.

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