No, not THAT sort of pirate ... actor Johnny Depp in Pirates Of The Caribbean: Dead Man's Chest. Picture: Supplied Source: The Sunday Telegraph

Hollywood studios are hoping to overturn a ruling that internet service provider iiNet could not be held responsible for illegal file-sharing, The Daily Telegraph reported.

The group argues iiNet knew its customers were breaching their copyrights but did nothing to crack down on the illegal trade.

Australia's third-largest internet service provider after Telstra and Optus, iiNet is listed on the Australian Securities Exchange.

Peer-to-peer file sharing made up as much as half of all internet traffic hosted by iiNet, according to evidence tendered to the court.

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The studios, which include Colombia, Universal and Disney, argue that when iiNet was told of the piracy, it should have tried to halt it but iiNet argued it was impossible do so without breaching the Telecommunications Act.

It also argued warning customers was either too difficult or too costly.

Movie pirates use peer-to-peer file programs such as LimeWire or websites such as Swedish-based The Piratebay to share movies free of charge.

LimeWire allows users to exchange files with each other, without central servers. Legal alternatives include Telstra and ReelTime, which also offer time-limited rentals.

The studios are hoping to overturn a full Federal Court decision handed down in February. The case, running since November, 2008, will not be heard by the High Court until next year. It is the first case of its kind to be run anywhere in the world.

Most pirated films are made using hand-held cameras in cinemas and are then shared over the internet.

Faster broadband speeds and greater access to broadband has enabled rates of piracy to skyrocket.

A study commissioned by the Australian Federation Against Copyright Theft said piracy cost the Australian economy $1.4 billion in the year to July 2010.

iiNet has about 1.3 million subscribers across broadband, telephone and mobile broadband and phone, and generates annual earnings of about $90 million.

In the UK, internet service providers have sent warning letters to customers suspected of illegal file-sharing.

And last month an English court ruled that England's largest ISP must block access to any site which breaches film studios' copyright.