Yesterday I reported how in Atlantic v. Howell, federal judge Neil V. Wake in Phoenix ruled that simply placing music in KaZaA’s “shared folder” does not in itself constitute copyright infringement, that actual unauthorized distribution must be proven.

“Merely making an unauthorized copy of a copyrighted work available to the public does not violate a copyright holder’s exclusive right of distribution,” wrote judge Neil Wake.

Well, the importance of the decision is now being further analyzed for it just may end the RIAA’s campaign of P2P lawsuits as we know it.

How?

The RIAA’s lawsuits against file-sharers are essentially based on the investigative work of the anti-piracy company MediaSentry. It identifies specific PCs on file-sharing networks networks that are “making available” a large number of songs and then downloads some of them for verification of copyrighted material. It then logs the PCs IP address and turns it over to the RIAA, which then sues whomever it belongs to.

Copyright-law guru Bill Patry takes up the matter even further, pointing out that “The court thus permitted the labels to use their investigator to engage in conduct that the labels then pointed to in proving their allegations,” in a blog posting. “But authorized conduct cannot be unauthorized conduct, and since the only evidence of actual distribution (if that is what the downloading is) was authorized, there could be no infringement, as EFF pointed out.”

Simply put, you can’t authorize somebody to download copyrighted material and then charge the person who gave it to them with unauthorized distribution since the copyright holder in fact authorized it.

Thus, combining Wake’s decision with Patry’s reasoning that the RIAA’s authorized downloading can’t be submitted as evidence of unauthorized distribution, the RIAA is left trying to gather evidence of downloads done by third parties.

“This case harmonizes everything. It sets the gold standard,” said Ray Beckerman, a copyright attorney with the New York firm of Vandenberg & Feliu and author of the Recording Industry v. The People blog, in a telephone interview with News Factor. “Other district courts will follow it. Appeals courts will follow it.”

So what does this mean for future P2P lawsuits?

“I’m pretty sure these P2P cases will be struck down,” Beckerman said, “but I expect this to go away before it’s all resolved.” Shareholders will put a stop to the lawsuits before the courts do, he added.

Either way, Atlantic v. Howell may just be the case that finally broke the RIAA’s back.

Stay tuned.