The battle against the illegal downloading was dealt a major blow as the European Court of Justice (ECJ) ruled that internet service providers (ISPs)cannot be obliged to release customers' personal data during civil legal claims raised by copyright owners.
The point was settled in a legal action taken by Promusicae, a Spanish musical and audiovisual producers' organisation, against the Spanish Telecoms giant, Telefonica.
Promusicae went to court on the basis that Telefonica customers were breaching copyright rules by illegally downloading audiovisual files using the peer-to-peer programme, KaZaA.
Promusicae applied to the Spanish courts to force Telefonica to disclose the identities and contact details of its Internet customers where the IP address, date and time of connection were known. The Spanish Court then approached the ECJ to clarify the position.
The ECJ ruling in favour of Telefonica states that current EU rules on intellectual property and the protection of personal data 'do not require the member states to lay down an obligation to communicate personal data in order to ensure effective protection of copyright in the context of civil proceedings'.
However, the Court did acknowledge that the ruling raised the issue of reconciling different fundamental rights - in this case, the right to respect for private life and the right to protection of property.
Consequently, the ECJ has concluded that EU Member States should strive to strike 'a fair balance' between the two when applying the relevant EU Directives.
The conflict between these two basic principles is only relevant to civil proceedings. Under criminal law, privacy protection is clearly less guaranteed.
The ruling sits uneasily with current EU proposals to promote the distribution of film and other creative content online.
Commissioner Viviane Reding of DG Information Society and Media has stated that she sees the protection of copyright as the 'cornerstone' of the European Commission's approach in this area.