A federal judge lowered the penalty levied for illegal file sharing from $1.5 million down to $54,000 on Friday, in what was the third trial in the ongoing lawsuit filed by the Recording Industry Association of America in 2007 against Jammie Thomas-Rasset.

The vast number of RIAA suits are settled out of court, and this one can’t be setting many precedents that the RIAA is thrilled about. U.S. District Judge Michael Davis declared that the November jury’s award of $62,500 each “for stealing 24 songs for personal use is appalling.”

The trial presumed that Thomas-Rasset did download the songs from Kazaa, but a penalty of $1.5 million is “so severe and oppressive as to be wholly disproportionate to the offense and obviously unreasonable,” Davis wrote.

Even so, the case is unlikely to be over just yet. “We disagree with the decision and are considering our next steps,” RIAA spokeswoman Cara Duckworth said.

Lawyer and blogger Ben Sheffner broke the news about this latest ruling on Twitter.

The RIAA takes the position that judges do not have the power to lower penalties assessed by juries. Thomas-Rasset’s attorneys contend that the damages of as much as $150,000 per track, as allowed for under the Copyright Act, are unconstitutional.

Judge Davis made his opinion on the matter clear in his ruling for the U.S. District Court for the District of Minnesota. “The court is loath to interfere with the jury’s damages decision. However, the Constitution and justice compel the Court to act,” he wrote in his decision.

Thomas-Rasset’s first trial in this matter was declared a mistrial. The second trial attempted to levy $1.92 million in damages, but Judge Davis ordered a new trial unless the parties could agree on a settlement for less. That resulted in the third trial, which is the one in which the jury decided on a $1.5 million judgment.

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