On March 7, Camelot Distribution Group, an obscure film company in Los Angeles, unveiled its latest and potentially most profitable release: a federal lawsuit against BitTorrent users who allegedly downloaded the company's 2010 B-movie revenge flick Nude Nuns With Big Guns between January and March of this year. The single lawsuit targets 5,865 downloaders, making it theoretically worth as much as $879,750,000 – more money than the U.S. box-office gross for Avatar.

At the moment, the targets of the litigation are unknown, even to Camelot. The mass lawsuit lists the internet IP addresses of the downloaders (.pdf), and asks a federal judge to order ISPs around the country to dig into their records for each customer's name.

It's the first step in a process that could lead to each defendant getting a personalized letter in the mail from Camelot's attorneys suggesting they settle the case, lest they wind up named in a public lawsuit as having downloaded Nude Nuns With Big Guns.

A hearing on that request is set for April 13. In all probability none of the alleged downloaders know it's happening.

Welcome to the future of Hollywood, or at least the less glittery outskirts of Tinsel Town that produce art films, exploitation flicks and porn. Over the past year, small-budget film producers have nearly perfected a slick, courtroom-based business strategy that's targeted more than 130,000 suspected movie downloaders.

The types of films include the Oscar-winning Hurt Locker, the less-critically acclaimed Nude Nuns, and dozens of adult movies.

'Most people don't want to have a public lawsuit against them for Teen Anal Nightmare 2, so they settle.'In contrast to the the RIAA's much-criticized and now-abandoned war against music pirates – which targeted 20,000 downloaders in six years – the movie lawsuits appear to have been designed from the start as for-profit endeavor, not a as a deterrent to piracy.

They differ from the music litigation campaign in another significant way, as well. Civil defendants are normally sued in the courthouse nearest to where they committed the alleged wrongdoing – in this instance on computers in their homes or work. It's a bread-and-butter legal precept meant to prevent people who live in California from having to answer to lawsuits in Texas, for example.

Following that standard – more or less – the RIAA generally targeted dozens or so defendants in each suit, not thousands, and filed each case in the jurisdiction of the users' ISP. The RIAA lost millions of dollars with this strategy, which required them to pay individual $350 filing fees for each case, and sometimes engage local counsel.

The movie studios, in contrast, often are suing thousands of people at once, in a total of just about three dozen lawsuits (.xls) often filed in the plaintiff's lawyer's backyard and far from the defendants' homes.

This strategy was pioneered last year by the U.S. Copyright Group, a coalition of indy film producers formed explicitly to make money by suing downloaders. It's now being mimicked by individual production companies.

The Nuns lawsuit, "Camelot Distribution Group Inc, v. Does 1 through 5865", is the most recent. A February 2 lawsuit filed in Illinois, "Openmind Solutions, Inc. v. Does 1-2925," (.pdf) is targeting alleged downloaders over adult titles like Throated, 1000 Facials Britney Beth and Stuffed Petite.

Rights groups and defense lawyers are rankled by the large-scale, semi-automated character of the litigation.

"This is a mass copyright litigation machine," says Lory Lybeck, a Seattle attorney representing dozens of the defendants. "Most people don't want to have a public lawsuit against them for Teen Anal Nightmare 2, so they settle."

Using an outside contractor, like the U.K. firm GuardaLey, the companies start by trolling BitTorrent sites for the films in question, and dipping into the active torrents, capturing the IP addresses of the peers that are downloading and uploading pieces of the files.

The companies identify the service provider for each IP address from a public database, then generate a spreadsheet, with the IP, the name of the service provider, the date and time of the download, and sometimes the size of the file and the BitTorrent client used.

The spreadsheet is converted to a PDF and attached to a discovery demand filed with the court, asking a judge to grant subpoenas to all the ISPs. Once the film company has the name and address of the customers, they send out settlement letters.

"If forced to proceed against you in a lawsuit, we will most certainly have a computer forensic expert inspect your computer in an effort to locate the subject movie file, or to determine if you have deleted any media files," reads one of the letters sent in the Copyright Group's Hurt Locker case.

"If in the course of litigation the forensic computer evidence suggests that you did delete media files after being on notice of our client's claims, our client will add a spoliation of evidence claim against you." (.pdf)

The Hurt Locker letter threatens the alleged file sharer with a $150,000 fine, the maximum allowed under the Copyright Act, and demands a $2,900 settlement if paid by a certain date, $3,900 afterward. The recipient is referred to the group's "online payment site" for convenience. (Thomas Dunlap, the Copyright Group's lead attorney, did not respond for comment.)

It's an efficient model for winning settlements: the movie downloaders face the prospect of defending against a federal lawsuit, possibly thousands of miles away, and having a third party rifle through their computer. A quick settlement is even more appealing in cases involving pornography, where a defendant who chooses to fight likely will see their name on a public court docket.

That's the predicament a 38-year-old Houston, Texas, man finds himself in. A defendant in "West Coast Productions v. Does 1 - 5,829," (.pdf) filed in Washington, D.C. in January, the man was notified by Comcast this month that a subpoena is seeking his information in connection with Teen Anal Nightmare 2. He has a month to challenge the subpoena.

The man, who spoke to Threat Level on condition of anonymity, says he wants to fight the allegations. But to do so, he likely would have to litigate halfway across the country, and his name might be exposed by the sheer act of challenging the subpoena.

"I didn't download this," he says. "I'm gonna fight this."

Nancy Waddell, an Iowa woman targeted in the Openmind Solutions porn case, says she was terrified when she received her settlement letter. She insists she never downloaded anything, but concedes a relative might have downloaded movies from her internet connection while living in her house.

"It won't happen again, because I don't know how to do much other than e-mail and Facebook on a computer," she wrote the court.

"I'm freaked out," Waddell, a 54-year-old single factory worker, said in a recent telephone interview. "This has got me scared to death."

The Electronic Frontier Foundation says the studios' litigation engine would grind to a halt if the plaintiffs were forced to break up their lawsuits into regions. The group argues that there's no legitimate reason a single case should be allowed to target 5,000 or more defendants.

Even at the early stage of the proceedings, when a film company has little information but an IP address, it's a simple matter to determine the proper venue using geolocation tools, or by suing at the location of the ISP.

"Anybody with access to a computer can take an IP address and find out where it is," says Corynne McSherry, the EFF's lead copyright litigator. "Why are the courts allowing this when the judges don't have jurisdiction? They're allowing a commercial venture of trolls."

Last week, the EFF persuaded U.S. District Judge Stephen Williams in East St. Louis to put a hold on the subpoenas targeting 2,925 alleged porn downloaders pending an April 11 hearing. John Steele, the Chicago lawyer representing Openmind Solutions, said in a court filing that the EFF "raises red herring arguments in the pursuit of selfish aims at the expense of the efficient administration of justice. The court should ignore the EFF and its hollow cries of unfairness." (Steele declined interview requests.)

Other judges are approving the mass filings. Last week, U.S. District Judge Beryl Howell in Washington, D.C. – who is a former RIAA lobbyist – approved subpoenas in a 2010 lawsuit filed by the U.S. Copyright Group, overruling protests by Time Warner Cable that responding to subpoenas for 1,028 of its subscribers would be too big of a task for the broadband provider.

"Given the administrative burden of simply obtaining sufficient identifying information to properly name and serve alleged infringers, it is highly unlikely that the plaintiffs could protect their copyrights in a cost-effective manner," Judge Howell ruled.

She granted the Copyright Group's discovery request, which targets 5,500 alleged downloaders of Deceitful Storm, Fast Track No Limits and A Numbers Game, among other films.

The low-budget studios' tactics are markedly different from those employed by the Motion Picture Association of America, which represents larger studios. The MPAA generally has focused its efforts on lobbying, and litigating against the file sharing websites themselves. It has effectively shuttered every U.S.-based BitTorrent site. Decisions against two of the biggest names in movie piracy – The Pirate Bay of Sweden and IsoHunt of Canada – are pending.

But however controversial, the mass-litigation tactics appear to be working; defendants are settling the cases out of court, according to interviews with defense attorneys. Terms are confidential.

"Most of the people I represent settle immediately because they want this over," says Illinois attorney Charles Mudd. "This is an abuse of the court process."

Scott Hervey, the Los Angeles attorney behind the Nude Guns with Big Guns lawsuit, takes issue with that. "My goal is to lessen the severe economic impact that illegal downloading is having on my clients," he said in a telephone interview. He also thinks it's only fair that a California judge demand internet companies to cough up the account holders of the IP addresses, even if they don't live near Los Angeles.

The infringement is so widespread, he said, that this is the most efficient method of protecting Camelot's intellectual property.

"The only information we have on them right now is a series of numbers and dots," he said. "Once we find out who these people are, we will give them an opportunity to resolve this issue."

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Disclaimer: Results of Wired.com's IP Detective tool (above) are not conclusive. If a match is found, this does not mean your computer was used to download the file in question, nor that you are a target of the lawsuit. IP addresses can change from time to time. If you didn't personally use BitTorrent to download the named film on the day and time listed, it's likely your computer has simply inherited the IP address of someone who did.

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