Pablo Soto's story may be every computer whiz kid's dream -- or nightmare. After leaving school at 16 to support his family, he managed to eke out a living doing what he loves most: designing computer programs.

Then in 2001, the Madrid native launched Blubster, one of the world's most popular peer-to-peer Internet file-sharing programs of recent years -- with no training and operating out of his grandmother's apartment.

Now Soto may become a victim of his own success as he finds himself the lone defendant in the latest major legal battle by the mighty music industry against Internet piracy; a Madrid court is expected to rule this month. The case, although similar to others in Europe and the U.S., is being closely watched on both sides of the Atlantic because Spain is ranked as one of the world's worst Internet piracy offenders.

"We are attacking companies who are profiting by developing applications that are used for piracy," said Antonio Guisasola, president of Promusicae, the Spanish record label association that includes Sony, Universal, Warner and EMI. It is suing Soto for euro13 million on grounds of unfair competition.

Promusicae brands Soto an Internet parasite who robs artists and record companies by facilitating illegal downloads of music and other copyrighted protected material with his P2P programs.

Guisasola hopes the case will mirror recent court rulings against operations such as Napster in the United States and Pirate Bay in Sweden. He and others also hope it will also force Spain to finally draw up new legislation and enforce it. They cite a new law in France that aims to cut off Internet connections of those who repeatedly download music and films illegally.

But the case could cause problems for the music industry, too.

In Sweden, the Pirate Party received strong support in the run-up to European Parliament elections June 7 after 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.

"If they win, I close shop," said Soto. "If I win, I'll be able to sleep again. euro13 million would be a financial life sentence."

Soto, 29, said Blubster is a fully legal Internet tool -- admittedly one designed precisely to skirt the legal loopholes that nabbed Napster in 2001 -- 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.

Examples of so-called legitimate uses include downloading historic speeches, uncopyrighted music and public domain intellectual property such as music and books whose copyright has expired, he said.

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

Soto recounted that 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 loads 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.

For supporters, Soto is a something of a hero of the new online cultural freedom movement which promotes copyleft, as opposed to copyright. Under copyleft, entertainers and other people make their work available online free of charge, thus bypassing companies that impose copyright restrictions.

These supporters say the trend is gathering support in Europe and the United States and could one day threaten the established entertainment industry. This, they say, is the real reason why the industry is going after Soto.

Downloading copyrighted material is illegal in Spain but not a criminal offense, 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 U.S. government and that country's powerful entertainment lobby.

"Internet piracy in Spain has reached an epidemic level," the U.S. Congressional International Anti-Piracy Caucus said in a recent report.

Separately, the U.S. Trade Representative said Spain would be kept on its 2009 Watch List as a serious offender.

Both reports accuse the Spanish government of doing little to uphold the law and to stop piracy.

Certainly, the industry appears to be suffering badly.

According to the U.S. 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 percent over the last few years.

"Spain can't aspire to be in the G8 of industrialized nations and at the same time be in G10 of Internet pirates," said Guisasola.

Spain denies the problem is much bigger here than elsewhere but observers predict that it will likely draw up new and stricter legislation, not least because it wants to improve relations with the new U.S. government whose vice president, Joe Biden, was a leading member of the anti-piracy caucus.

Soto's lawyer, Javier de la Cueva, a leading advocate of copyleft, argues that the U.S. reports are based solely on industry figures and not backed up by independent assessments.

He recognizes, however, that while the likes of Blubster may be undermining the music industry the time has come for the entire industry to change.

"You can't stop this movement. There is a new social reality. Industry must embrace technological developments, not fight them," he said.