HOLLYWOOD studios and record labels are being forced to go back to the drawing board to come up with a new way of combating online piracy after the Federal Court ruled that internet service providers are not required to police copyright infringement on their networks.

The music industry says it may have no choice but to sue individuals for illegal file sharing unless the federal government intervenes with a solution to its piracy woes.

All the major film studios sued iiNet in an effort to force the internet service provider to warn and even disconnect customers who repeatedly download movies illegally.

It was the first case of its kind in the world and the first time an Australian trial had been covered live on Twitter.