The Oslo district court unanimously ruled that Johansen did not violate any laws when he developed and posted online a DVD descrambling program, which disables the encryption technology that would otherwise block users from copying the digital videodiscs.
Jon Lech Johansen developed the program, called "DeCSS," and posted it on the Internet when he was 15.
Johansen said he used the program to view movies on his Linux-based computer (which at the time could not run DVDs) rather than buying an expensive DVD player. Johansen said he posted DeCSS online so that other computer programmers could test his software.
The Oslo court's three-member panel, which included one judge and two technology experts, ruled that Johansen did nothing wrong in bypassing DVD scrambling codes, saying he could not be convicted of breaking into his own property.
Head Judge Irene Sogn, in reading the verdict, said the court found "no evidence" that Johansen or others used the program unlawfully to access movies, adding that consumers have the right to view legally-obtained DVDs on any device they prefer.
"The court finds that someone who buys a DVD film that has been legally produced has legal access the film. Something else would apply if the film had been an illegal ... pirate copy," the ruling said.
Sogn furthermore rejected prosecutors' requests for a 90-day suspended jail sentence, confiscation of the teenager's computer equipment, and payment of all court costs.
Norwegian police charged Johansen three years ago after the Motion Picture Association of America formally complained that the teenager had created a program that encouraged DVD film piracy.
The MPAA, which represents Hollywood studios like Universal Pictures, Sony, Warner Brothers, 20th Century Fox and Disney, responded to the court's decision: "We understand that the prosecution in Norway is reviewing whether to take an appeal, and we support that consideration. We look forward to reviewing the court's decision in greater detail."
Norwegian prosecutors will decide in the next two weeks whether to appeal the decision.
Johansen said he expected prosecutors to appeal, but said he was "very satisfied" with the decision.
"I'm happy but not surprised," the 19-year old told reporters after his acquittal. "This is about consumers' rights, and all over the world copyright holders are trying to limit consumers' rights. We cannot have that."
The court's decision means that anyone in Norway is allowed to copy legally obtained digital media.
Johansen, nicknamed "DVD Jon," became a folk hero for making his DeCSS program widely available on the Internet, in direct defiance of the Hollywood industry's copyright protection technology.
"Johansen's acquittal..will hopefully convince Hollywood to stop filing unfounded charges in cases where there is no copyright infringement," Cindy Cohn, legal director for the Electronic Frontier Foundation, an advocacy group that assisted in Johansen's defense, said in a statement.
Johansen's DeCSS program works to remove the copyright protection technology, called Content Scrambling System, from DVD videodiscs, enabling users to view DVDs on other equipment and copy movies onto computer hardware.
The film industry uses the Content Scrambling System technology to help block illegal copying of DVD films, but the CSS technology also prevents users from watching DVD films on "unauthorized equipment," such as computers.
While the DeCSS program is legal in Norway, such software is banned in the U.S. under provisions of the 1998 Digital Millennium Copyright Act, which prohibits the use of technology that effectively dissembles copyright protections built into digital media.
The MPAA specifically targeted the DeCSS program since it allows anyone "to break the copy protection on DVDs..and illegally copied onto a computer's hard-drive for further distribution over the Internet or otherwise, in perfect, digital format."
In 2000, the MPAA and its international counterpart launched more than 60,000 investigations into suspected pirate activities, and more than 18,000 raids against pirate operations, in coordination with local authorities around the world.
The MPAA estimates the entertainment industry loses at least $3 billion each year in potential worldwide revenue due to piracy.
Last year, the Hollywood industry scored a victory after a U.S. court banned Eric Corley from posting online Johansen's DeCSS program.