Federal authorities in the first-of-its-kind game-console-modding criminal trial abruptly dropped their prosecution here Thursday, "based on fairness and justice."

"The government has decided to dismiss the indictment," prosecutor Allen Chiu told the judge shortly before the jury was to be seated on the third day of trial.

The announcement came a day after a whirlwind of legal jockeying in the case against defendant Matthew Crippen, a 28-year-old Southern California man. The government charged that Crippen, a hotel car-parking manager, ran a small business from his Anaheim home modifying the firmware on Xbox 360 optical drives to make them capable of running pirated or unauthorized games.

It was the nation's first jury trial to test the anti-circumvention provisions of the 1998 Digital Millennium Copyright Act as applied to game consoles. The law makes it a crime to offer a product or service that circumvents a technological measure designed to protect copyright material. Each of the two charges carried a maximum five years.

"It still has not hit me yet," Crippen said outside court, moments after Chiu dismissed the indictment.

US District Judge Philip Gutierrez had blasted the prosecution's case Wednesday, prompting a brief recess for prosecutors to decide whether they would forge ahead. The prosecution's decision to continue would come back to haunt them as the government's first witness ultimately unraveled their case.