BRUSSELS (Reuters) - European Union countries can refuse to disclose names of file sharers on the Internet in civil cases, the EU's top court said on Tuesday in a blow to copyright holders trying to fight digital piracy.

The European Court of Justice ruled on a dispute between Spanish music rights holders association Promusicae and Spain's top telecoms operator Telefonica.

Telefonica argued that, under a national law based on EU rules, it only had to disclose the name of an Internet subscriber for criminal actions, not civil ones.

"Community law does not require the member states, in order to ensure the effective protection of copyright, to lay down an obligation to disclose personal data in the context of civil proceedings," the court said in a statement.

Promusicae wanted names of Telefonica Internet clients who shared copyright material on the Web using the KaZaA file exchange software, so it could start civil proceedings against them.

Civil proceedings are cheaper than criminal proceedings which typically require a higher burden of proof.

"There are several community directives whose purpose is that the member states should ensure, especially in the information society, effective protection of industrial property, in particular copyright," the court said.

"Such protection cannot, however, affect the requirements of the protection of personal data. The directives on the protection of personal data also allow the member states to provide for exceptions to the obligation to guarantee the confidentiality of traffic data," the court added.

EU rules do not preclude the possibility for EU countries of laying down an obligation to disclose personal data in the context of civil proceedings, it said.

"However, it does not compel the member states to lay down such an obligation," the court said.

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