In a landmark piracy case, the Federal Court has ruled that a group of internet service providers (ISPs) must hand over contact details of Australians accused of illegally downloading the movie Dallas Buyers Club.

Dallas Buyers Club LLC, which owns the rights to the 2013 Hollywood blockbuster, argued a group of internet service providers including iiNet should be forced to hand over the contact details.

Iinet, Dodo, Internode, Amnet Broadband, Adam Internet and Wideband Networks will also be required to disclose customer information.

The decision could set the scene for copyright owners to chase hundreds of thousands of illegal downloaders.

Dallas Buyers Club LLC's parent company Voltage Pictures used German-based firm Maverick Eye UG to hunt down those sharing the film using software such as BitTorrent, and uncovered a total of 4,726 IP addresses.

It is likely that those internet users will now be sent letters threatening legal action unless they settle.

But while the Federal Court's Justice Nye Perram said he would order the ISPs to divulge the names and physical addresses of the customers, he ruled against making the details public, and said any letters sent to the customers had to be vetted by him.

Similar actions have been brought against individual pirates in the US in the past, but Australian bandwidth provides a target-rich environment for those hunting online pirates.

It is still unclear what amount Australian internet users will face in claims for illegal downloading, but similar American cases have involved thousands of dollars.

The executive director of the IP Awareness Foundation, Lori Flekser, said the consequences should be commensurate with the activity undertaken.

"It is very hard to measure. Because of course price is one of the key reasons [that] people give for piracy. And what's a fair price to one person is not a fair price to others.

Ms Flekser said today's decision helped to signal to people that illegal downloading was not OK.

"IP Awareness Foundation research has consistently shown that one of the key reasons that pirates give for their online activity is that no-one is stopping them," he said.

"And this lack of intervention simply reinforces the idea that it's not important enough. Today's decision shows that this issue is finally being taken seriously.

Professor Michael Fraser of UTS Law Faculty was unsure of the impact the decision would have on piracy.

"The ISPs argued that handing over customer details could lead to internet trolling - where copyright holders in the US have sent letters demanding alleged pirates sometimes pay thousands of dollars, to avoid being sued," he said.

"Justice Nye Perram said he hopes to avoid any abusive practices here ... but the judge did warn that a deterrence to piracy is needed and some illegal downloaders could face severe penalties."

Today's judgement comes a day before ISPs are due to submit a Draft Copyright Infringement Code to the Australian Communications and Media Authority (ACMA), which would introduce a three-strikes approach to combat online piracy.