Fans of file-sharing have been handed a significant victory by a US court.
The court drew on earlier rulings about copying technology
Federal appeal court judges have ruled that the makers of peer-to-peer software are not responsible for what users do with their network.
They said the structure of the networks made it impossible for the system's creators to exert control over users.
The decision is a blow to the US movie and music industries, who were seeking damages for copyright infringement from file-sharing firms.
In their ruling, the judges said the case had parallels with older cases which said video recorders should not be banned just because some people put them to illegal ends.
"History has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be a player piano, a copier, a tape recorder, a video recorder, a personal computer, a karaoke machine, or an MP3 player," wrote the judges in their opinion.
"Thus, it is prudent for courts to exercise caution before restructuring liability
Fred von Lohmann, who represented StreamCast in the case, said: "The same principle that people who make crowbars are not responsible for the robberies that may be committed with those crowbars."
The ruling was the latest in a case brought by US music and movie makers against the Grokster and StreamCast file-sharing systems.
It was made by the 9th US Circuit Court of Appeals and upheld a decision made in a lower court.
The judges said it should be up to Congress rather than the courts to change copyright laws.
One factor that led the US court to rule in favour of Grokster and StreamCast was the lack of central servers that co-ordinate file-swapping activity.
In the past Napster's use of central servers led the same court to call for that network to be shut down.
The decision means that instead of suing the creators and operators of file-sharing networks for copyright infringements, record labels and movie makers will have to take the more cumbersome route of finding and suing individual file swappers.
The US record industry has already filed lawsuits against more than 3,400 people and 600 of those cases have been settled for about £3,000 each.
Following the ruling, the Motion Picture Association of America said it was reviewing its options about what to do next.
"Today's decision should not be viewed as a green light for companies or individuals seeking to build businesses that prey on copyright holders' intellectual property," said Jack Valenti, MPAA chief executive.
Mitch Bainwol, head of the Recording Industry Association of America, said the decision did nothing to stop firms such as Grokster and StreamCast doing something about illegal use of their networks.