Technology industry representatives have expressed concerns following the Supreme Court ruling on file-sharing.
Activists have demonstrated outside the Supreme Court
The US court ruled that file-sharing networks such as Grokster can be held responsible if they intend for their customers to use software primarily to swap songs and movies illegally.
The decision has given the entertainment industry a new legal weapon against internet piracy.
But experts say that the ruling leaves plenty of room for interpretation.
Issue of infringement
The case against Streamcast Networks, which makes the software behind Grokster and Morpheus, had been closely watched by the entertainment and technology industries as a test of copyright law in the digital era.
It began in October 2001 when 28 media companies filed their legal complaint. They alleged that Streamcast was prospering from piracy taking place on the file-sharing networks.
However, the attempts to win damages suffered a series of defeats, with judges in those lower courts citing a ruling made in 1984 over Sony's Betamax video recorder.
The Supreme Court sought to leave in place the principles of the Betamax ruling but said that this case was "significantly different" because of evidence that file-sharing sites were seeking "to cause and profit from" copyright infringement.
Justice David Souter wrote: "We hold that one who distributes a device with the object of promoting its use to infringe copyright... is liable for the resulting acts of infringement by third parties."
But the court also said a technology company could not be sued if it merely learns its customers are using its products for illegal purposes.
That balancing test, the court said, was necessary so that it "does nothing to compromise legitimate commerce or discourage innovation having a lawful promise".
Critics say this leaves a broad grey area, with the courts left to work out what constitutes encouraging copyright infringement.
The ruling has been seen as a major victory for the Hollywood studios and big record labels, which have been suing thousands of people caught sharing copyrighted movies and music online.
"The Supreme Court sent a strong and clear message that businesses based on theft should not and will not be allowed to flourish," said Motion Picture Association of America president Dan Glickman.
In the UK, Peter Jamieson, head of the British Phonographic Industry, said: "This decision makes it clear that companies who distribute file-sharing software to promote and profit from the stealing of music are liable for their actions.
"It is good news for everyone who loves music."
It clears the way for the entertainment industry to file piracy lawsuits against technology companies which it believes are encouraging copyright infringement.
Representatives from the technology industry are worried that the ruling could lead to uncertainty about the legality of new products and services.
"The court has done little to provide a clear path for legitimate innovators and manufacturers to avoid lawsuits related to copyright infringement over legitimate products and services," said Gary Shapiro, president of the Consumer Electronics Association.
"With this ruling the Supreme Court has handed a powerful new tool to litigious content creators to stop innovation.
"Innovators must now consider new murky legal rules and potentially overwhelming legal costs before bringing their product to market or even moving forward with an innovative idea."
And experts have questioned how the courts will decide whether a product or service is "inducing" piracy.
"Obviously there is lots of room for interpretation, so courts and lawyers will be busy for many years on these cases," said Lauren Weinstein, a well-known net privacy campaigner.
"In the long run, the decision is like trying to use a wad of chewing gum to plug a leaking hole in a massive earthen dam," he said in an e-mail published on an internet mailing list.
"You may cut down on the dripping for the moment, but don't throw away your snorkel, for the flood is yet to come."