A European entrepreneur who challenged the right of US authorities to regulate small drones has settled his case with the Federal Aviation Administration (FAA), his lawyer said Thursday.

Raphael Pirker will pay $1,100 in the settlement after the FAA had initially slapped Pirker with a $10,000 fine for reckless flying.

The fine came when he used a five-pound (2.25 kilogram) Styrofoam drone to shoot a promotional video at the University of Virginia in 2011.

It was the first time the US civil aviation authority had mounted a case against the operator of a remote-controlled unmanned aerial vehicle, or UAV.

When Pirker contested the fine, a federal administrative law judge ruled in March that his drone was a model aircraft not subject to FAA rules.

The FAA appealed that decision to the National Transportation Safety Board, which in November ruled in its favor, even though the agency has yet to come up with a comprehensive set of drone regulations.

In a statement, Pirker's lawyer Brendan Schulman called the settlement "favorable." The settlement does not amount to an admission of wrongdoing.

A dual national of Austria and Switzerland, Pirker runs a Hong Kong-based company called Team BlackSheep that sells drones worldwide.

Flying UAVs for commercial purposes is not allowed in US skies without FAA authorization -- a situation that critics say is undermining US competitiveness in the fast-growing civilian drone industry.

Despite the settlement, Schulman, a New York-based attorney specializing in drone-related legal issues, said the case had proven worthwhile.

"It not only prompted a vigorous international public discussion about the existing framework, but also has encouraged regulators to open new paths forward," he said.