Updated Alan Ellis, the former admin of music BitTorrent tracker OiNK, was acquitted of conspiracy to defraud by a Middlesbrough court today.
In a landmark trial, the 26-year-old stood accused of making $300,000 in user donations from the invite-only service, which members used to share high quality and pre-release music.
Ellis' defence argued OiNK was analogous to Google, and that he was not responsible if members used it to infringe copyright.
He had been arrested in a dawn raid by Cleveland police in October 2007, acting on intelligence from the BPI. Police invited TV cameras to film the swoop, dubbed "Operation Ark Royal".
The IT worker smiled as the jury returned a not guilty verdict and made no comment as he left court, the Press Association reports.
The BPI said: "This is a hugely disappointing verdict which is out of line with decisions made in similar cases around the world, such as The Pirate Bay.
"The defendant made nearly £200,000 by exploiting other people's work without permission. The case shows that artists and music companies need better protection."