A federal judge backed the music storage-locker business model Monday while ruling that companies may develop services that store their customers’ songs in the cloud.

The closely watched case brought by EMI against MP3tunes comes as Amazon and Google recently launched similar services without the music labels’ consent. Apple is expected to launch a cloud-storage service with the labels’ blessing perhaps as early as next month.

U.S. District Judge William Pauley III said the MP3tunes service was protected by the Digital Millennium Copyright Act of 1998.

“If enabling a party to download infringing material was sufficient to create liability, then even search engines like Google or Yahoo! would be without DMCA protection. In that case, the DMCA’s purpose — innovation and growth of internet services — would be undermined,” (.pdf) the judge wrote.

Pauley added that “MP3tunes’ online storage system utilizes automatic and passive software to play back content stored at the direction of users. That is precisely the type of system protected by the DMCA safe harbor.” The judge said his ruling was based on the same law that has allowed YouTube to flourish.

The judge added, however, that MP3tunes was liable for the infringement of about 350 songs via its sideload.com site, which could potentially cost MP3tunes millions of dollars in damages at trial. Michael Robertson, the site’s founder, was considering appealing that portion of the 29-page opinion.

“We’re not happy with losing the 1 percent of the ruling that we did. We’ll look at it to see where we go from here,” Robertson said in a telephone interview.

The DMCA gives internet service providers immunity from infringement if they remove material at the request of a rights holder, the judge noted. But MP3tunes did not adequately respond to EMI’s request, Pauley said.

Sideload allows MP3tunes customers the ability to search the internet for free songs. EMI asked MP3tunes to remove the infringing songs from customers’ storage lockers, but MP3Tunes did not. Instead, MP3tunes removed the links to those songs from the Sideload site, but allowed its customers to store the song if they downloaded it before the link was removed.

EMI did not immediately respond for comment.

For a closer look at the decision’s ramifications, see Ryan Singel’s take on Wired.com’s Epicenter blog.