U.S. District Judge Michael Davis of Duluth, Minn., declared a mistrial in the case against Thomas, who was charged in October with violating copyright law by making 24 songs available for others to download on the Kazaa network.
Davis set aside the verdict on the grounds that he misguided the jury, telling jurors that simply the act of making a copyrighted song available for sharing amounts to infringement. The judge first indicated in May that he was considering granting a new trial.
In June, the Electronic Frontier Foundation and other consumer and industry groups weighed in, also claiming the jury instructions were erroneous.
The Recording Industry Association of America argued that the jury instructions were valid.
"Requiring proof of actual transfers would cripple efforts to enforce copyright owners' rights online--and would solely benefit those who seek to freeload off plaintiff's investment," RIAA attorney Timothy Reynolds wrote in a court filing.
Thomas is the only individual charged with copyright infringement by the RIAA who has taken her case to trial.
RIAA spokesman Jonathan Lamy said Davis' decision was not surprising, but the RIAA still had confidence in its case.
"As with all our illegal downloading cases, we have evidence of actual distribution--an assertion this court and others nationwide have made clear constitutes infringement," he said. "We have confidence in the facts assembled against the defendant."
By Stephanie Condon