Adrianne Pecotic, executive director of the Australian Federation Against Copyright Theft (AFACT), said the action followed a five-month investigation by the industry. "We identified thousands of infringements of copyright by iiNet's customers and we provided iiNet with about 18 separate notices of those infringements and, unfortunately, iiNet did not do anything to address that copyright infringement," she said.

Pecotic said she would not rule out further action against other internet providers. But she was not interested in targeting individual downloaders at this stage. The companies are seeking a ruling that iiNet infringed copyright by failing to stop users from engaging in illegal file sharing over BitTorrent networks. They want an order forcing iiNet to prevent its customers from engaging in copyright infringement over its network. "I would expect, yes, we would go on to claim damages," Pecotic said.

White said it was up to law enforcement and the courts to decide whether people were guilty of illegal downloading. "If these people have done something wrong then the authorities can act on it but really it's inappropriate for us to act on an allegation," he said.



Chris Chard, managing director of Roadshow Entertainment, said that, as broadband speeds and internet penetration increased, more and more people were turning to piracy. "Village employs over 5000 Australians. We're active in the cinema business, in film distribution, in DVD distribution and we invest in film production, and piracy has the potential to significantly erode all of those businesses," he said. The action follows months of wrangling between the movie and music industries and ISPs over the lengths to which internet providers need to go to prevent illegal file sharing on their networks. The industry wants ISPs to agree to cut off services for those who repeatedly infringe copyright.

However, internet providers have argued that the courts already provide adequate remedies for copyright holders and they should not be forced to police their users. "This is a very important test case for the internet industry in Australia," said Peter Coroneos, chief executive of the Internet Industry Association.

"It will test the effect of the safe harbour provisions that were introduced with the US free trade agreement, which provides immunity for ISPs in certain circumstances such as transmission, hosting, caching and referencing activities." Coroneos said the IIA board will shortly convene to develop a response on the legal action against iiNet.

But while the movie industry has now stepped up its aggression, the music industry has yet to take legal action against any internet providers over the issue.

"The Australian music industry has consistently maintained that it would prefer to negotiate a code of conduct with ISPs on this issue," said Sabiene Heindl, general manager of the recording industry's anti-piracy arm, Music Industry Piracy Investigations (MIPI). Michael Speck, who between 2004 and 2006 ran the music industry's landmark case against KaZaA as the head of MIPI, said he believed legal precedents already established and the emergence of filtering technologies meant iiNet would lose the case.



After leading the music industry to victory against KaZaA, Speck joined forces with one of the file sharing program's key proponents, Kevin Bermeister, to invent filtering technology designed to stamp out illegal file sharing. "Once it becomes apparent to everyone that the ISP's most significant traffic is illicit or that particular customers are significant infringing hubs then there can be no doubt that the ISP has an obligation to act," said Speck. The case will be back before the court on December 17.