The record companies said that Soto had designed his Blubster, Piolet and Manolito software with the intent of providing a platform for users to pirate music while he generated profit. This, the labels said, amounted to unfair competition in the market. Soto should pay them 13 million euros ($18m) in damages, the labels argued.

Following years of litigation, in 2011 a Madrid court handed defeat to the labels by declaring Soto’s technology neutral. While his users may have infringed copyright, Soto was not responsible for that, the court said. Furthermore, since Soto wasn’t in the record business and the labels weren’t in the file-sharing business, the unfair competition claim was also dismissed.

After investing so much time in the case, the labels weren’t prepared to concede defeat. The case went to the Madrid Court of Appeals which has just made its decision public. It’s a decisive win for Soto and a big loss for the labels.

“[Soto's] activity is not only neutral, and perfectly legal, moreover it is protected by article 38 of our Constitution,” the Court wrote in its ruling.

Speaking with TorrentFreak, Soto says that the Court saw no problem with sharing technology and discovered no plan “to sink or unbalance the recording industry” or obstruct the development of its business.

“The court affirmed — yet again — that [the creation of sharing technologies] is not an act of looting, unfair competition or unfair benefit from others’ effort,” Soto informs TF.

The Spaniard, who has been developing software since he was 16 years old, adds that the win is not only good news for him, but also for others seeking to innovate.

“This clears the path for more opportunities to bring leading edge technologies to the marketplace and no longer be distracted by misguided legal tactics from the copyright conglomerates. We really appreciate and thank our loyal following, especially among the readers at TorrentFreak.”

Soto’s lawyer, David Bravo, who described the ruling as having a “very strong foundation”, said developers will now be able to go about their business free from “inventive legal interpretations that define the very creator of a file-sharing tool as the responsible of copyright infringement.”

In celebration of the victory, Soto has released a brand new version of his Blubster software, for the first time powered by BitTorrent.

“While we have continued innovating with Torrents.fm, we can now also focus once again on further creating and offering advanced P2P technology across our other networks with this new version of Blubster just launched today,” Soto told TF.

Traditionally Windows only, Blubster will soon debut on both Linux and Mac.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

Born in 1979, Soto had been in the computer business since he was 16 years old and had created several file-sharing applications including Blubster (the so-called “Spanish Napster”) Piolet and Manolito.

But the record companies claimed that Soto designed the software with the express intent of providing a platform for Internet users to download and share music for free, a situation they describe as “unfair competition.” Pablo was also accused of creating file-sharing applications in order to profit from infringements of the plaintiffs’ copyrights.

Following a 2009 trial and several years of litigation, Madrid Commercial Court No. 4 has now delivered its verdict. It rejected the compensation demands of the labels and ruled in favor of the developer, declaring that his technology is “totally neutral.”

“An analogy would be like if we created a private group of friends to share some information, photographs for example,” the judge wrote in his ruling. “But you can not then blame the developer [if people chose to share copyright material], since the only thing he has done is connect the friends.”

The court also rejected the claims of unfair competition, noting that Soto isn’t in the business of making and marketing records, and the plaintiffs aren’t in the file-sharing business.

“We are extremely grateful to the court for finding not only in our favor, but in favor of justice, innovation and in equal access to digital distribution,” said Pablo Soto, founder and CEO of MP2P Technologies. “The copyright conglomerates would like to stifle innovation but today’s significant ruling against this tactic echoes around the globe.”

In an interview with 20minutos.es, Soto extended thanks to his lawyers Javier de la Cueva and David Bravo and noted that although delighted with the outcome (“I feel like i’ve crossed the Gobi desert with no water”), both he and his company have been deeply affected by the litigation.

“I had a company with eight years of work behind it but following the lawsuit I had to reduce staff by more than a half,” said Soto. “The funding was reduced to zero, no-one wanted to invest in a company being sued for 13 million euros.”

Aside from the generalities of the complaint, the case has been controversial since the start. In preparation for filing suit the labels went as far as to hire a private detective who turned up at Pablo’s offices masquerading as a customer. Using a hidden camera the detective took photographic ‘evidence’ which later turned up in court filings.

Promusicae president Antonio Guisasola said the decision will be appealed and expressed hope that in future the new Spanish government would take “resolute action” against people like Soto.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

Just under a year ago in June 2008, Warner Music, Universal Music, EMI and Sony under the umbrella of PROMUSICAE (Productores de Música de España) – Spain’s answer to the RIAA – filed a lawsuit against Pablo’s company, MP2P Technologies.

The group didn’t care how they got their ‘evidence’ against Pablo either. The record companies even hired a private detective who turned up at Pablo’s offices pretending to be a customer. Using a hidden camera, the detective took photographs, which can be seen in various pages in the complaint against Pablo’s company.

Demanding a massive 13 million euros ($17.8m) from the Spaniard, they claim that his software – which allows people to share files over the Internet – has caused them to lose a substantial amount of earnings. Pablo has never denied that he created the applications for commercial purposes and that he made some money from them. However, Pablo denies any destructive intentions against the music industry.

For their part, the record companies claim that Pablo designed the software with the express intent of providing a platform for Internet users to download and share music for free, a situation they describe as “unfair competition.” Pablo is also accused of creating these applications to profit from work to which the plaintiffs own the copyright.

But of course, since the case is taking place in Spain, there are some other interesting issues being thrown into the mix. Spanish courts have ruled again and again that no crime is committed if people download music for personal use and no profit is directly generated from any infringement. Additionally, Spaniards already pay special taxes on things like CDs, DVDs, memory cards and mobile phones to compensate the music industry for supposed losses.

But the almost undoubted legality of sharing files in Spain goes even further. In all cases presented so far, the courts have ruled that even BitTorrent and eDonkey-type sites are legal, if operated within the aforementioned parameters.

Furthermore, as pointed out by his legal team consisting of P2P and copyright experts Javier de la Cueva and David Bravo, Pablo merely created software and at no time has he ever had control over what users choose to do with it.

“This claim is illogical and goes against every principle of law. If every time someone builds something he has to ensure that any illegal use of it is impossible, we would all still be living in caves,” said Pablo. “You can not block a tool because of the use that someone might make of it. We designed a ‘tool’ for transferring files as efficiently as possible, full stop,” he added.

The case began in Madrid’s Superior Court on Tuesday and will continue today. So far Pablo says that although he is no lawyer, “Things are looking good,” despite a courtroom mishap. Unfortunately for Pablo, his iPhone received an unexpected incoming call. “My geek ultra edition R2D2 tone began to sound at full volume, and due to my nerves I dropped the mobile on the floor. This left the room clear that (a) I’m freaky and (b) I am clumsy,” he said.

Pablo also notes that he was touched when Marti Lafferty, chairman of the Distributed Computing Industry Association (DCIA) flew all the way from Washington to testify in the case. He told the judge that “Spain should be proud of Pablo.”

A decision is expected within a month, but it is entirely possible that the case will end up in Spain’s Supreme Court and could take many years to reach a final conclusion.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.