The US has warned Antigua and Barbuda not to proceed with a plan to run a legal "piracy" site.
It follows a World Trade Organization (WTO) ruling that the islands have the right to suspend US intellectual property rights.
The permission was granted as a result of the US barring its citizens from using gambling sites based in the Caribbean nation.
Antigua's government says its goal remains a negotiated settlement.
However, its high commissioner in London added that the country reserved the right to carry out its threat.
"The highest trade body in the world, having reviewed the merits of Antigua and Barbuda's case and its ability to recover from the negative impact of the USA's unilateral and discriminatory actions, has made its ruling," Carl Roberts told the BBC.
"Antigua and Barbuda has always reserved its privilege to utilise its legal rights on international law.
"This is one of our options as we continue to seek a fair and equitable resolution of our case."
He added that he objected to US's description of the planned site - which would sell movies, music and games without paying copyright fees to their US owners - as being "government-authorised piracy".
The dispute dates back to the 1990s when Antigua and Barbuda - a former British colony - made efforts to develop an internet gambling industry to help tackle a decline in tourism.
It says its efforts were dealt a major setback by the US government's efforts to enforce laws which Washington said made electronic betting illegal if it crossed state lines.
Antigua complained to the WTO about the US's actions in 2003 claiming jobs and income had been lost as a result.
In 2005 the trade body ruled that the law unfairly discriminated against foreign companies despite the US saying that it never intended its commitments to the WTO to mean that it would allow the practice. I
It later agreed a compensation packages with other WTO members, but Antigua held out demanding $3.44bn (£2.2bn) of compensation a year.
In 2007 the WTO awarded it the right to waive intellectual property rights worth up to the smaller sum of $21m a year.
On Monday the WTO's dispute settlement body gave final authorisation for Antigua to sell movies, music, games and software via a store that would be able to ignore US copyright and trademark claims.
The US has responded to the move warning that such a move would amount to "theft".
"Government-authorised piracy would undermine chances for a settlement," said a spokeswoman for the US Trade Representative's office.
"It would also serve as a major impediment to foreign investment in the Antiguan economy, particularly in hi-tech industries.
"The United States has urged Antigua to consider solutions that would benefit its broader economy. However, Antigua has repeatedly stymied these negotiations with certain unrealistic demands."
Antigua's high commissioner in London described this as unhelpful rhetoric suggesting the US had not made proper efforts to settle the row.
"If you make offers and the offers are not accepted that means you have not touched the core of the problem," said Mr Roberts.
"You can't simply say that because you've put something on the table that there's an automatic expectation of acceptance."
One lawyer said that if Antigua did set up the mooted media download site it would be legal for UK-based internet users to buy films and music from it.
"If the site is based in Antigua, the files are sold in the local currency and it is not actively promoted to foreign subscribers or visitors there is nothing that could be done to prevent this," said Aaron Wood, an intellectual property specialist at Briffa.
"Assuming they set up a streaming site and a Brit then paid it for a pass key that would be completely legal.
"I also imagine they would set it up in a way that would not divulge where the user was based so they could say they were ignorant to their location."