US District Judge Gladys Kessler was quoted as saying that the tobacco industry had 'marketed and sold their lethal product with zeal, with deception, with a single-minded focus on their financial success, and without regard for the human tragedy or social costs that success exacted.'
But Kessler said she did not have the authority to order the industry to fund billion-dollar programmes to help smokers quit - a key demand in the case brought by the US Justice Department against Philip Morris USA, a subsidiary of Altria Group Inc.
Kessler did side with the government in its claim that low-tar cigarettes could not be considered healthier alternatives to regular cigarettes, and decided to ban the terms 'light' or 'ultra-light' from all marketing campaigns.
Shares in Altria were up more than three percent in after-hours trading
Thursday as the ruling seemed to pave the way for a proposed break-up of the company, which would make it more valuable to shareholders, Bloomberg reported.
The Justice Department expressed some satisfaction with the ruling, saying it would have a 'positive impact on the health of the American public'.
'We are pleased with the Court's finding of liability on the part of the defendants, but disappointed that the court did not impose all of the remedies sought by the government,' it said in a statement.
The lawsuit had been running for six years, first filed by the Clinton administration in 1999 in an effort to reclaim the billions of dollars expended every year on smoking-related illnesses.