Oh, so this is interesting. A US judge has dramatically cut the damages that prominent file-sharer Jammie Thomas must pay the record industry.

As previously reported, Thomas was initially ordered to pay the US record industry $222,000 after being found guilty in 2007 of illegally sharing 24 songs via Kazaa. A retrial followed last year for technical reasons, in which Thomas was found guilty for a second time, and then ordered to pay $1.92 million in damages. The discrepancy between the first and second set of damages was possible because US copyright law sets parameters of $750 to $150,000 per infringement, leaving a rather large margin of variation to the judge or jury.

The $1.92 million ruling - while providing the Recording Industry Association Of America who pursued the litigation with a headline grabbing deterrent for other file-sharers - was always a bit ridiculous, given there was no way Thomas could ever hope to pay it. It wasn't really good news for the RIAA either, it merely adding to the idea that the RIAA's lawsuits against individual file-sharers were unfair David v Goliath style legal cases.

As previously reported, there wasn't much precedent in US law for an appeal judge to overturn statutory damages awarded by a jury. However, last week Michael Davis, chief judge for the US District Court of Minnesota, did just that, setting new damages of $2250 per song, or $54,000 overall. In a rare application of common sense in such situations, Davis noted that the jury's mega-bucks ruling was in part designed to deter other American file-sharers, but he added: "The need for deterrence cannot justify a $2 million verdict for stealing and illegally distributing 24 songs for the sole purpose of obtaining free music". He's right you know.

The RIAA has been given a week to decide whether to accept the lower damages or push for another trial on the issue. It told CNet that it was "reviewing the decision". Team Thomas could also appeal Davis' ruling, and push for an even lower figure, all the way down to the $750 per track minimum.

While the RIAA would have a case for not accepting Davis' judgement - as we said, precedent is generally on their side with regards appeal judges not messing with a jury's damages decisions - some reckon they will now look to settle this case without further court time. Not even the most loony of the RIAA's lawyers really believed they would ever get $1.92 million off Thomas, plus they won the more important legal argument: Davis noted Thomas' copyright infringement should be punished, just with  more realistic damages. More importantly, as previously reported the RIAA is no longer pursuing lawsuits against individual file-sharers, and having this one lingering on is doing no one any favours, given the RIAA backlash that is unleashed whenever the trade body goes to court.

Assuming the RIAA and Thomas do settle, this will strongly bolster the case for a similar cut in the damages awarded in that other high profile outstanding file-sharing case, the Joel Tenenbaum case. His lawyers are currently appealing the whole guilty verdict in his case, but might be persuaded to put the whole thing to rest if his $657,000 damages payment could be cut to five figures as with Thomas.