Internet providers must hand over contact details of Australian customers accused of illegally downloading The Dallas Buyers Club, the Federal Court has ruled.

The landmark piracy and privacy case was lodged by Dallas Buyers Club LLC, the company that owns the rights to the 2013 Hollywood blockbuster.

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It wanted a group of internet service providers (ISPs), including iiNet, to hand over contact details of Australian customers accused of illegally downloading the movie.

The ISPs argued it was a breach of privacy and that the company intends to use a practice known as "speculative invoicing".

Justice Nye Perram ordered the ISPs had to hand the contact details over, but said the details could not be made public and any letter sent to the customers had to be vetted by him.

Dallas Buyers Club LLC claimed it had identified 4,726 Australian IP addresses where the movie was illegally downloaded.

"They are to submit to me a draft of any letter they propose to send to account holders associated with the IP addresses which have been identified," Justice Perram said.

Justice Perram highlighted the "need to provide deterrence" against file sharing.

"It is not beyond the realm of possibilities that damages of a sufficient size may be awarded," he said.

The ISPs had argued that the value of each copy of the film was less than $10 and it was "simply not plausible to think that the applicants would seek to recover such sums".

Outside court Dallas Buyers Club LLC's lawyer Michael Bradley said it was a step towards stamping out illegal downloads.

"Australia is one of the jurisdictions with the highest rate of unauthorised downloading and this is a first step from a copyright owner to try to change that balance," he said.

iiNet 'very happy' with judgment

In a statement iiNet said its stance against Dallas Buyers LLC has ensured the details of the customers would only be handed down under strict conditions and had shone a light on speculative invoicing.

"By going through the process we've been able to ensure that our customers will be treated fairly and won't be subjected to the bullying that we have seen happen elsewhere," iiNet chief executive officer David Buckingham said.

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"We're very happy with Justice Perram's judgment and his balanced approach to both the studio's and consumers' rights."

He said the company could only use the details to sue customers, which he believed was unlikely as the cost of legal action would outweigh any potential gains.

"Letters issued by the rights holders will be reviewed by the judge to ensure they are not threatening, providing a significant safeguard for our customers," he said.

"As a result, the ruling will put a major dent in the process and business case behind speculative invoicing, since the financial returns could be outweighed by the costs of legal action."

Mr Buckingham said iiNet were advocates of legitimate content being made available to the Australian market at the same time as it was released elsewhere in the world for a reasonable price.

The case has been listed in the Federal Court for further orders to be made on April 21.