Johansen is responsible for creating and distributing a DeCSS software product over the Internet that gave other hackers the key components needed to copy DVD content. The young hacker's claim to fame is that he broke the content scrambling system that is used to prevent copying of copyrighted DVDs.
Johansen was 15 when he developed the program to watch movies on a Linux-based computer.
Johansen's legal defense has been based on the argument that he was free to copy DVDs that he purchased legally for himself, which has brought up issues pertaining to free speech and freedom of expression.
In a U.S. court of law, Johansen's actions would be considered a criminal offense, however, there are no such laws currently in place in Norway that prohibit the digital duplication of copyrighted material.
The Oslo appeal court upheld the verdict from a lower court issued last January that stated Johansen had broken no law by creating the software.
Today's ruling marked the movie industry's second try at convicting Johansen. Last week, attorneys for the Motion Picture Association of America (MPAA) had sought a 90-day suspended jail sentence and a $3,000 fine for Johansen.
According to reports, the appeals court, which is made up of seven judges and data experts, issued a unanimous ruling.
According to the AP, the Oslo appeals court said that the lettering on DVD labels informing consumers that copying content is forbidden was too small and often not in the language of the country where they were sold. The court also ruled that Johansen's actions had not violated Nordic laws for protecting intellectual property.
Johansen was originally indicted by the U.S. DVD Copy Control Association and the Norwegian Motion Picture Association (MAP), the European arm of the MPAA.
The general sentiment from the entertainment industry upon hearing the verdict was that the Norwegian appeals court was giving free license from this point on to anyone who desired to pirate DVD content, further draining the coffers of the MPAA.
The MPAA contends that it has lost more than $3 billion dollars in sales this year due to piracy and the illegal trade of media content over peer-to-peer networks.
According to reports, the ruling only applies to hacker activity that originates in Norway, although it will set a precedent for future cases involving piracy throughout the world.
Johansen was not available for comment at the time of this printing. According to reports, he is currently traveling in Europe.
"While the ruling does not affect laws outside of Norway, we believe this decision encourages circumvention of copyright that threatens consumer choice and employment in the film and television industries," the MPAA said in a statement.