The Federal Communications Commission dealt a severe blow on Monday when a federal appeals court overturned the $550,000 fine that the FCC levied against CBS Corp. for indecent exposure incident during the 2004 Super Bowl halftime show.

The three-judge panel of the 3rd U.S. Circuit Court of Appeals ruled that the FCC "acted arbitrarily and capriciously" in penalizing the station for a "fleeting image of nudity." Throwing out the $550,000 fine levied by the agency against CBS for broadcasting the U.S. recording artist Jackson's right breast for nine-sixteenths of one second, the appeals court panel ruled that the FCC’s took a hasty decision to impose that much hefty fine on CBS, the largest the commission has yet levied against a television company.

The court said that the exposure was too brief to violate FCC rules designed to keep children from watching indecent material on TV between 6 a.m. and 10 p.m.

"The airing of scripted indecency or indecent material in prerecorded programming would likely show recklessness, or may even constitute evidence of actual knowledge or intent," the judges said. "But when unscripted indecent material occurs during a live or spontaneous broadcast, as it did here, the FCC should show that the broadcaster was, at minimum, reckless in causing the indecent material to be transmitted over public airwaves."

Janet Jackson's breast-baring "wardrobe malfunction" incident took place during the 2004 Super Bowl halftime show. During the performance, Janet sang along with Timberlake on his song "Rock Your Body." When Timberlake sang the lyric 'gonna have you naked by the end of this song,' he tore off part of Jackson’s bustier exposing her right breast, which was partially covered by a nipple shield. Jackson and Timberlake were performing to a live audience of more than one hundred million people.

Reacting to the court’s ruling, FCC chairman Kevin Martin said: "I am surprised by today’s decision and disappointed for families and parents. The Super Bowl is one of the most watched shows on television, aired during the hours when children are most likely to be in the audience."

"I continue to believe that this incident was inappropriate, and this only highlights the importance of the Supreme Court’s consideration of our indecency rules this fall," he added.

On the other hand, happy with the federal appeals court’s ruling, CBS, in a statement, said: “We are gratified by the court’s decision, which we hope will lead the F.C.C. to return to the policy of restrained indecency enforcement,” adding that “This is an important win for the entire broadcasting industry, because it recognizes that there are rare instances, particularly during live programming, when it may not be possible to block unfortunate fleeting material.”

Born on May 16, 1966, in Gary, IN, Janet Jackson is the younger sister of “King of Pop” Michael Jackson. Jackson is ranked as the ninth most successful act in the history of rock and roll. Guinness World Records lists her as the world's most searched-for person in Internet history. She has won five Grammy Awards, received an Oscar-nomination at the 66th annual Academy Awards and was awarded the first 'Icon' award from MTV.