Hollywood film studios today lodged an appeal against a landmark legal judgment which found an Australian Internet provider was not responsible for illegal movie downloads by its customers.

The Australian Federation Against Copyright Theft (AFACT), representing a consortium of 34 studios, said the Federal Court's ruling was out of step with well-established copyright law.

"The court found large scale copyright infringements (proven), that iiNet knew they were occurring, that iiNet had the contractual and technical capacity to stop them and iiNet did nothing about them," said Neil Gane, executive director of AFACT.

"In line with previous case law, this would have amounted to authorisation of copyright infringement."

Gane said AFACT had filed an appeal with the Federal Court arguing it had erred on 15 grounds, setting a dangerous precedent that allowed Internet companies to turn a blind eye to copyright theft.