"The difficultly in applying this method in this case is that it is not known how many downloads were made from the sound recordings uploaded by the account holder."
Rianz ultimately sought $1175 for the 11 songs, as well as $3500 compensation. The maximum sum allowed by the Act is $15,000.
InternetNZ policy leader Susan Chalmers said the case showed the importance of challenging these cases in order to "test the contours" of the new file-sharing regime.
"It's part of their right to do so and this tribunal changes the typical due process arrangements that we see in other copyright infringement cases so it is really important for people to challenge these cases of infringement."
Ms Chalmers felt Rianz was seeking such a high sum in order to deter other file-sharers.
"I'm not sure when the recording industry will just wake up," she said. "The law itself I've always felt was never going to achieve that which it set out to achieve. It just doesn't work."
It is the second prosecution brought by Rianz under the act to have been dropped.
In October it withdrew a case against a student who was the account holder for her flat's shared account.
According to the law collective which represented her, Tech Liberty NZ, she had never used file sharing software.
Rianz had claimed a total of $2669 in penalties before withdrawing the charge.