iiNet, and the industry body, the Internet Industry Association, say ISPs should not be required to take action against any customers until they have been found guilty of an offence by the courts. ISPs argue that, like Australia Post with letters, they are just providing a service and should not be forced to become copyright police.

Conversely, the TV and movie industry want ISPs to disconnect people it has identified as repeat infringers. There would be no involvement from police or the courts and the industry would simply provide the IP addresses of users they believe to be illegal downloaders. "To shift the burden of proof and require that ISPs terminate access to users upon mere allegations of infringement would be incredibly harmful to individual internet users in Australia," the online users lobby group Electronic Frontiers Australia said. "Every citizen has a right of due process under the law and, when faced with having their internet service terminated, every citizen has the right to ask that the case against them be proven first."

Kimberlee Weatherall, associate director of the Intellectual Property Research Institute of Australia and senior law lecturer at the University of Queensland, said that, to find iiNet liable, a court would have to become involved in industry regulation, making ISPs act as "police, judge and executioner". "It would have to ignore or sideline the thrust of the many legislative moves the Government has made to protect ISPs who are conduits to communication," she wrote in a blog post.

Weatherall believes that, instead of trying to force ISPs to disconnect customers, the film and TV industry should instead target those individuals in court. But the Australian Federation Against Copyright Theft has said it is not interested in going after individual downloaders. The iiNet case is similar to the one the music industry brought against the Kazaa file sharing service in 2002, which ended in 2006 with Kazaa's owners handing over $100 million in damages. Additionally, in 2005, Stephen Cooper, the owner of MP3s4free.net, and the website's host, E-Talk Communications, were successfully sued by the music industry for infringing copyright by publishing hyperlinks to sites that contained illegal music.

But Weatherall said both cases were different because they showed a clear knowledge and encouragement of copyright infringement, whereas iiNet simply provides the internet connection and is in no way directly involved with illegal downloading. Further, the Copyright Act and safe harbour provisions introduced with the US free-trade agreement provide some immunity for ISPs when it comes to the actions of their users.

Nic Suzor, an Australian lawyer doing his PhD at the Queensland University of Technology and vice-chairman of EFA, said internet users would face "substantial hardship" if iiNet lost the case. "ISPs will be terrified of being sued, and will likely disconnect individual users without taking the care to determine the merits of allegations of copyright holders," he said. "There will be no court processes, so individual users will have no ability to contest the allegations, short of suing their service providers. There will be no court processes, so the media will not fully report on the issues, and a lot of the injustices will go unnoticed."

John Linton, CEO of the small ISP Exetel, said legal action by copyright holders was "inevitable" and the movie industry's strategy was to "take one or more smaller ISPs to court to test the provisions of the current newer clauses in the Copyright Act". Unlike iiNet, Exetel forwards infringement complaints from the movie industry to its customers. Linton said iiNet brought the legal action on itself by failing to play ball.

Peter Coroneos, chief executive of the Internet Industry Association, said the impending court battle would be "a very important test case for the internet industry in Australia". The IIA board will meet on Wednesday to discuss a response to the case, which will be before the court on December 17.