Antigua and Barbuda, a tiny Caribbean nation, complained in 2003 that the US ban on Internet gambling violated WTO rules, and won.
Antigua, with a population of about 80,000, has long been a centre for offshore Internet gaming and insisted that the US ban on US residents placing wagers with companies based in the country was an unfair trade restriction.
A WTO arbitration ruled in 2007 that the country could seek sanctions on US intellectual property, by for instance lifting copyright on films and music, of up to $21 million a year.
Although that was a far cry from the $3.4 billion Antigua had requested — an amount Washington at the time argued was "patently excessive" and more than three times the size of the country's economy — the US balked.
Washington has since then been trying to get Antigua to instead accept compensation, according to a source close to the matter, but the country refused and received the final go-ahead on Monday from the WTO's Dispute Settlement Board to impose the sanctions.
In a long statement Monday, Antigua vowed to do so "in a reasonable and responsible manner."
The US, meanwhile, insisted sanctions against its intellectual property would amount to "theft" and "government authorized piracy."