A US appeals court has upheld an injunction against the Madster file trading network this week, ruling that "willful blindness" of copyright violation occurring over its network makes the company liable.
The ruling is the second blow to Madster - formerly called Aimster - and one in a string of recent successes for the music industry in its battle against copyright infringement over P2P networks.
Madster was originally ordered to shut down last year pending a trial.
Madster owner John Deep had argued that the encryption feature of his service prevented him from knowing exactly what users were trading over the network.
However, the court ruled that "willful blindness is knowledge in copyright law".
In its decision, the court panel stated that "one who, knowing or strongly suspecting that he is involved in shady dealings, takes steps to make sure that he does not acquire full or exact knowledge of the nature of those dealings is held to have criminal intent".
The decision adds more weaponry to the music industry's P2P fighting arsenal by ruling that network owners cannot turn a blind eye to copyright infringement.
"We're delighted by this decision which makes clear... that companies cannot profit from copyright infringement. A P2P service is not off the hook simply because it claims there may be legitimate uses of its network," Recording Industry Association of America (RIAA) president Cary Sherman said.
The decision could stir more concern for P2P users, however, since the RIAA has recently said it would begin targeting individuals for copyright violation.
Sherman said, "The decision also reaffirms, yet again, that when individuals 'share' copyrighted music, without permission of the copyright holder, they are liable for direct copyright infringement."
Scarlett Pruitt writes for IDG News Service