The Australian Federation Against Copyright Theft (AFACT) said on Monday that iiNet was well aware of copyright violations committed through its facilities since film studios had duly informed the internet service provider on the cases of illegal downloading of movies.

In its appeal to a Federal Court decision which stated that iiNet Ltd (ASX: IIN) did not authorised the alleged illegal film copying, the group of 34 film studios argued that the company knew what was going on but it still failed to act on the information provided by the federation.

AFACT asked Justice Dennis Cowdroy to reconsider his decision of freeing iiNet from any liability on the alleged copyright infringement, claiming that he may have to utilise the appropriate text for authorisation as provided by the Australian copyright law.

In behalf of the federation, Barrister David Catterns informed the court that iiNet was regularly furnished with details of erring subscribers for each week of the 59 weeks cited in the complaint.

Mr Catterns said that iiNet was clearly notified of policy infringements the whole time the violations were committed but he lamented that the company did not act despite the fact that "they had complete power to prevent this in a practical sense."

AFACT lawyers argued on its appeal that iiNet held the natural disposition as service provider to address and prevent the violations by calling the attention of its customers on the alleged infringements.

They said that iiNet could have warned, suspended and eventually terminated the contracts of the erring subscribers but much to their surprise, the company apparently elected to do nothing even when it was already informed about the situation.

Justice Cowdroy indeed affirmed that copyright infringement was committed when he issued his decision in February but instead blamed BitTorrent system for the purported violation and not the use of internet via iiNet's facilities, virtually exonerating the company from any liabilities since the system was not its creation or within its jurisdiction.