The case against the easyInternetcafé chain, part of the easy group best known for its easyJet airline, was brought by the British Phonographic Industry (BPI), which acted on behalf of Sony, EMI and Universal.
The dispute started following a BPI investigation, at easyInternetcafé's in eight UK cities, which discovered hundreds of music files on computer hard drives.
The BPI initially attempted to settle the case outside the courts, demanding £1 million from easyInternetcafé, according to the company. This demand was lowered to £100,000 when the company refused to pay.
It appears that the BPI sued after the details of the settlement negotiations were disclosed to the press.
EasyInternetcafé rejected the copyright infringement allegations, maintaining that it suspended the unlicensed commercial service of downloading copyrighted music in September 2001.
Following this, the company claimed it could not be held responsible for customers downloading music files using its computers. EasyInternetcafé also claimed that such activities are no different to recording a TV programme to watch later, which is legal.
The High Court Judge rejected the company's defence and found it guilty of copyright infringement in a summary decision - which means the case did not go to a full trial. The court has yet to determine penalties.
Mr Haji-Ioannou said in a statement today:
"We will appeal the decision. I believe the judges interpretation of the law on our main defence point which is based on the following principle was inaccurate; under the time-shifting principle, consumers have the right to record music or video in order to consume it at a more convenient time - that is why they can use the VCR at home.
On the same basis consumers were recording music in our internet cafés in order to consume it at a more convenient time. Obviously a judgement on that basis would have thrown the music industry in disarray. I believe it is a question for the House of Lords and not for a summary judgement. We will continue to fight the point on behalf of the consumer."
The law being referred to is a provision of the 1988 Copyright Design and Patents Act which reads:
'The making for private and domestic use a recording of a broadcast or cable programme solely for the purpose of enabling its review or listening to at a more convenient time, dose not infringe any copyright in the broadcast or cable programme or in any work included in it.'
The BPI, however, characterised the decision as an "important precedent in support of authorised licensing services."