A Madrid court is expected to rule later this month in a ground-breaking prosecution of software designer Pablo Soto who is being sued for €13 million for enabling internet piracy with his hugely popular peer-to-peer filesharing programs, including Manolito P2P.

A Swedish court gave prison sentences to four men behind the popular file-sharing site The Pirate Bay for helping millions of users download copyright protected material. The case has gone to appeal. Now the music industry is hoping the case against Soto will prompt a crackdown on illegal file-sharing in Spain which is ranked as one of the world's worst internet piracy offenders.

Pablo Soto is an international pin-up in the file-sharing world. After leaving school at 16, he set up in his grandmother's apartment in Madrid and in 2001 launched Blubster, one of the world's most popular peer-to-peer file-sharing programs of recent years. Now 29, he is president of his own company and says he makes a modest living from advertising on his sites.

Promusicae, the Spanish record label association that includes Sony, Universal, Warner and EMI, is suing Mr Soto for €13 million ($18 million) on grounds of "unfair competition".

"We are attacking companies who are profiting by developing applications that are used for piracy," Antonio Guisasola, president of Promusicae, said.

In Madrid's superior civil court Promusicae has branded Mr Soto an internet parasite who robs artists and record companies by facilitating illegal downloads of music and other copyrighted protected material with the Manolito/MP2P program, and the Blubster and Piolet file-sharing applications.

It is estimated that combined, these three pieces of software have been downloaded more than 25 million times. The €13 million claim for damages is based on the assumption that each one of these people has downloaded at least one track without paying for it.

"If they win, I close shop," Mr Soto told the Associated Press. "If I win, I'll be able to sleep again. €13 million would be a financial life sentence."

Mr Soto says his programs are legal internet tools and that he is not responsible for what people do with that tool. "My programs are not just for illegal music downloads. P2P file-sharing has many more uses," he said. Speaking outside court last month, he said: "Technology is always neutral, and you cannot accuse the developer of a program because of the use made of it by its users."

Mr Soto argued that if he is guilty, so too are companies such as Google or Spanish telecoms giant Telefonica that permit the process.

He described how he designed Blubster out of curiosity and initially distributed it among friends. But within days, he found that nearly a million people worldwide had downloaded it.

He admits he makes money from advertising but insists this is perfectly legal. He said that claims he has made vast sums of money are ridiculous, arguing that he has never had more than euro15,000 in his bank account, still operates out of his grandmothers apartment and lives in a rented flat.

Downloading copyrighted material is illegal in Spain but it is not a criminal offence, and courts consistently throw out cases on grounds that it is an infringement only if used for commercial profit.

This stance not only infuriates music companies but irritates the US's powerful entertainment lobby. The US copyright industry group International Intellectual Property Alliance says some 2 billion music tracks were illegally downloaded in Spain in 2008, compared to 2.2 million purchased legally.

The alliance, which includes Promusicae, says the industry in Spain lost $1.6 billion in revenue in 2007 and 2008 because of piracy. Promusicae says the industry's work force has declined by 70 per cent over the last few years. Promusicae hopes the case will force Spain to finally draw up new legislation and enforce it.

In May Spain was among five countries singled out by members of the US Congress for "alarming levels" of piracy of copyrighted movies, music, video games and other entertainment.

The Congressional International Anti-Piracy Caucus, made up of more than 70 members of the Senate and House of Representatives, placed Canada, China, Mexico, Russia and Spain at the top of their "2009 International Piracy Watch List".

"These countries stand out because of the scope and depth of their piracy problems, which cost the US copyright industries and the millions of Americans who work in these companies billions of dollars," the caucus said.

"Piracy has reached alarming levels" in these countries, it added, and is "largely the result of a lack of political will to confront the problem."

Mr Soto's lawyer, Javier de la Cueva, argues that the US reports are based solely on industry figures and not backed up by independent assessments. "You can't stop this movement. There is a new social reality. Industry must embrace technological developments, not fight them," he said.

The case has received widespread publicity in Spain.

Yesterday El Pais pointed out there are nuances beyond the black and white view of illegal downloading. Under a headline "Pablo Soto, the hero of free downloads, prohibits the copying of their programs", it noted that: "When any user tries to download a program created by this self-taught genius, such as Blubster, Piolet and Manolito, you get a notice that warns you that these programs are subject to copyright, according to international laws and in particular, of the United States and Spain."