Selling electronic cigarettes has effectively been banned in WA after the Supreme Court ruled the products were designed to look like the real thing - breaching State tobacco control laws.
Last year, the WA Health Department brought a test case against a Duncraig company selling e-cigarettes online, under the banner Heavenly Vapours.
The battery-powered devices do not burn tobacco but turn nicotine or fruit flavours into vapour which is inhaled and exhaled.
It is illegal under Australian law to sell e-cigarettes containing nicotine.
But the department prosecution argued it was also illegal to sell e-cigarettes containing no nicotine, because the law prohibits the sale of any food, toy or other product which is designed to resemble a cigarette or cigar.
A magistrate originally ruled there was not enough evidence to prove the two types of e-cigarettes sold looked like real cigarettes.
But after an appeal from WA health bosses, Supreme Court Justice Janine Pritchard ruled selling e-cigarettes in WA should result in a trader being prosecuted.
"Evidence supported the conclusion that the items were used for inhaling vapour (whether or not containing nicotine) through the mouth, which was exhaled in a manner reminiscent of the smoke from a cigarette," Justice Pritchard said.
Vince Van Heerden, owner of Heavenly Vapours, has begun an appeal to "crowdfund" the $50,000 he says he needs to continue his legal battle, saying the case has ruined him financially.
Australian Council on Smoking and Health president Mike Daube said the judgment was an important step in the continuing battle against smoking.
Last year, the Cancer Council of WA called for the promotion, sale and use of e-cigarettes to be banned, arguing they could become starter products for children and ex-smokers.
Mr Van Heerden is due to be sentenced next month.