In a legal decision that could dim the prospects for file sharing enthusiasts, the U.S. Supreme Court has reversed a lower court opinion, ruling that file sharing services such as Grockster should be held accountable for the piracy actions of its users.

The high court sided with a group of movie studios and music labels led by Metro-Goldwyn Mayer Studio Inc. - now owned by Sony Corp. and Comcast Corp. - which filed suit against Grockster and StreamCast Networks, claiming that the networks are primarily involved with illegal distribution of copyrighted materials.

In a unanimous decision, the Supreme Court ruled that the 9th Circuit Court of Appeals essentially was in error when it ruled that file sharing services should not be held responsible if their users illegally trade around copyrighted material. It sent the case back to the 9th Circuit court for retrial.

Expert reactions so far point to a good news, bad news effect for consumers. While the Supreme Court ruling may encourage movie studios and record companies to more aggressively file claims against such download services and individual users, it may also give content owners some assurance that their rights extend to online distribution. As such, they may be encouraged to free up more content to subscription download services.