They also claimed that, because files are broken up into tiny "packets" before being sent over BitTorrent, this may not be enough to suggest a "substantial portion" of a copyrighted file was distributed. The movie studios' lawyers argued that this is irrelevant to their case as all they need to prove is that iiNet users illegally obtained the files and then made them available for others to download over BitTorrent.

Admitting this is dangerous for iiNet because it would then make the ISP potentially liable and exposed to a multimillion-dollar damages claim. The studios hired online investigators DtecNet to intercept BitTorrent traffic and record all instances of iiNet users transmitting copyrighted movies illegally. They claim the evidence is iron-clad and barrister Tony Bannon, SC, was visibly frustrated that iiNet would not accept it. "How you can't admit that [iiNet users download movies illegally] ... is quite frankly beyond us," he said.

"They don't stop customers doing what they're doing and they keep asserting that they have insufficient information." The studios claim iiNet in effect "authorised" customers' copyright infringement by failing to disconnect them when notified of the infringements by the movie studios.

iiNet's barrister, Richard Cobden, SC, said the ISP was not required to act on a "mere allegation of copyright infringement" and used comments from former attorney-general Philip Ruddock that apparently back up this claim. iiNet has previously said that the case was "like suing the electricity company for things people do with their electricity". The studios say DtecNet's evidence is enough for iiNet to definitively determine whether a customer is trading movies illegally by comparing it with their own server logs.

Much of today's hearing was devoted to bringing Justice Dennis Cowdroy up to speed with technical concepts such as IP addresses and the workings of BitTorrent. The studios' lawyers admitted that DtecNet's evidence could only tell them that an iiNet user was illegally downloading, but could not identify the individual customer.

However, they pointed to previous judgments in the cases against the Kazaa file sharing service and MP3s4free.net owner Stephen Cooper, which found it was "not necessary to know the identify of each individual user". As part of their statement of claim, the studios also said iiNet was responsible for customers downloading movies illegally and then burning them to DVD to sell or share with friends. Justice Cowdroy in court today questioned whether they had any evidence that this was occurring, to which the studios' lawyers replied: "This is a notorious practice."

Justice Cowdroy also asked whether, upon receiving an infringement notice from the movie studios, it was possible for iiNet to go back and confirm that the user was downloading a specific movie at a particular time. Bannon said he couldn't "say yes or no" at that time.

The case is set for a formal hearing about October. The landmark case will determine the lengths to which an internet provider must go to prevent illegal downloading on its network. A loss for the movie industry could leave it no choice but to go after individual downloaders, as has occurred in the US. However, if iiNet loses, all ISPs could be forced to disconnect customers identified by the movie studios as illegal downloaders.