SAN JOSE, Calif. » A federal appeals court said Google wrongly collected people’s personal correspondence and online activities through their Wi-Fi systems as it drove down their streets with car cameras shooting photos for its Street View mapping project.

The ruling that the practice violates wiretap laws sends a warning to other companies seeking to suck up vast amounts of data from un-encrypted Wi-Fi signals.

"The payload data transmitted over un-encrypted Wi-Fi networks that was captured by Google included emails, usernames, passwords, images and documents," wrote the U.S. Court of Appeals in San Francisco in a report released Tuesday.

Google had argued that its activities were exempt from the wiretap law because data transmitted over a Wi-Fi network is a "radio communication" and is "readily accessible to the public."

Not so, wrote the judges, agreeing with an earlier federal judge’s ruling.

"Even if it is commonplace for members of the general public to connect to a neighbor’s un-encrypted Wi-Fi network, members of the general public do not typically mistakenly intercept, store and decode data transmitted by other devices on the network," they said.

Google’s Street View cars can be spotted with pole-mounted cameras on their roofs, photographing along roadways the world over. The photos then show up on Google’s popular Street View map option, where viewers can virtually scroll along a street past homes, cars and shops, all captured in photographs.

But unbeknownst to passers-by, those cameras weren’t just making photos. They were also collecting detailed information transmitted over Wi-Fi networks they passed through.

Privacy experts and industry watchers said this was the first time an appeals court has ruled that it’s illegal for a company to sniff out and collect private information from the Wi-Fi networks that provide Internet service to people at home. Google is also the first publicly known company to try.

"This appeals court decision is a tremendous victory for privacy rights. It means Google can’t suck up private communications from people’s Wi-Fi networks and claim their Wi-Spying was exempt from federal wiretap laws," said John Simpson, Consumer Watchdog’s privacy proj­ect director. "Because Google’s Wi-Spy activity was so extensive, the potential damages could amount to billions of dollars."

Marc Rotenberg, executive director of Electronic Privacy Information Center, called it "a landmark decision for Internet privacy."