A trial in Sydney could determine whether internet service providers (ISPs) can be held responsible for their users' pirated content.

One of Australia's largest ISPs, the Perth-based iiNet, is being sued by a consortium of film distribution companies.

The movie houses say the internet company has not been doing anything to stop its customers from illegally sharing movies and TV programs on the net.

But iiNet says if the movie company's demands are met, it would breach privacy laws and freedom of speech.

The case went before the Federal Court in Sydney on Tuesday morning.

The barrister representing the entertainment companies Tony Bannon SC, said investigators tracked 97,942 instances of iiNet customers sharing files illegally over 59 weeks.

The plaintiffs have narrowed down their case by focusing on just 86 popular movies and TV shows, including the latest Batman films, Pirates of the Caribbean and the TV shows The Simpsons, Bones and Heroes.

The entertainment companies compiled their evidence by hiring two investigators to subscribe to iiNet, to get accounts there and then begin trading files using different BitTorrent networks.

They kept track of what movies and TV shows they were sharing, when they downloaded them and the ID numbers of the computers they were sharing these files with.

Every week the entertainment companies sent that data to iiNet and asked that iiNet then disconnect the users who had been sharing the files illegally, but they say iiNet has done nothing about it.

Mr Bannon says iiNet is refusing to enforce its own user agreement, which says that they will not download files or anything illegally.

He is arguing that iiNet profits from selling bandwidth on the internet and as illegal downloads use a lot of bandwidth, the more that users download the more money iiNet goes on to make from them.

The hearings will continue over the next month.

iiNet is yet to mount their defence, but previously they have indicated privacy considerations stop them using information about what their clients do online.

They also say they will contest the notion hat they have been authorising any illegal file sharing, giving the analogy that if people were to send cocaine through the mail, Australia Post would not be taken to court for that illegal activity.

The court case will continue for at least over the next month.

There is alot at stake in this case, as it will determine to what extent Australian internet companies are responsible for illegal downloads on their systems.