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In a landmark case that could stop pirates in their tracks, leading ISP iiNet has formally defended itself against claims by movie studios that it willingly permitted customers to download movies illegally. In the Federal Court today, Australia's third largest ISP - which could face millions in damages - argued the case was "like suing the electricity company for things people do with their electricity". iiNet filed its defence yesterday, claiming that the Copyright Act and Safe Harbour provisions introduced with the US free trade agreement stipulated that ISPs were not liable for copyright infringement by customers. Today, Justice Dennis Cowdroy said the formal hearing would tentatively begin on October 5 and both sides would have two weeks to present evidence and make their case. Late last year, seven major movie studios and the Seven Network filed suit against iiNet for allegedly allowing its users to download pirated movies and TV shows using BitTorrent. 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. In its defence, iiNet admitted that the movie studios held copyright to their libraries of films but was not yet ready to concede that its customers illegally downloaded them. Regardless, it said that it would not derive commercial benefit from customers downloading films illegally and would in fact incur more costs due to the additional bandwidth used. In court today, lawyers for the movie studios said they provided iiNet with evidence of its customers' copyright infringement yesterday. The studios hired online investigators DtecNet to intercept BitTorrent traffic and record all instances of iiNet users downloading copyrighted movies illegally. In the face of this evidence, lawyers for the movie studios said they expected iiNet to admit that its customers had downloaded movies illegally. iiNet's lawyers said they were still reading the document but may be willing to concede that point. Both sides agreed that the main issue in the hearing would be whether iiNet was liable for the actions of its users and whether it in effect "authorised" their copyright infringement by failing to disconnect them when notified of the infringements by the movie studios.