By Jane Wakefield
Technology reporter, BBC News
Thousands of letters have been sent
Mobile firm O2 has stepped into the row over thousands of controversial letters that are being sent to alleged illegal file-sharers in the UK.
It condemned the attempts "by rights holders and their lawyers to bully or threaten our customers".
The row centres around UK law firm ACS:Law and its client DigiProtect, an anti-piracy firm which represents a series of content owners.
ACS: Law denies that its letters are bullying in nature.
"Neither we nor our clients threaten or bully anyone. We send out letters of claim to account holders of internet connections where those internet connections have been identified as being utilised for illegal file-sharing of our clients' copyrighted works," said Andrew Crossley of ACS:Law.
"Our letter makes an enquiry in that regard and invites the recipient of our letter to respond to this evidence. In addition they are invited to enter into a compromise to avoid litigation," he added.
The firm is in the process of contacting thousands of alleged UK pirates and offers them the chance to settle out of court for around £500 per infringement.
O2's broadband customers are among those sent letters.
"Where we are legally obliged to provide information and the correct paperwork is presented, we will comply with the law," said an O2 spokesman.
"But we prefer the 'win-win' approach of encouraging the development of new business models that offer customers the content they want, how they want it, for a fair price," he added.
ACS:Law says it has so far identified around 60,000 different UK IP addresses, which reveal the identity of individual computers.
It is in the process of applying for court orders which would force the internet service provider behind the IP address to hand over the physical address of the individual connected to the computer.
Not all IP addresses will result in a physical address because one machine can generate more than one IP address and, in some cases, the ISP is unable to find the real address.
ACS:Law estimates that for every 1,000 IP addresses it requests court orders for it will get around 400 actual addresses.
Many of the cases already under way were passed on to ACS: Law by another law firm, Davenport Lyons, which originally began the claims.
Davenport Lyons has been subject to an investigation by the Solicitors Regulation Authority over its role in sending letters to alleged pirates.
The SRA confirmed to the BBC that two of the partners, Brian Miller and David Gore, have been referred to its disciplinary tribunal.
"We are very aware of the public and parliamentary concern about the issue behind the Davenport Lyons complaint," said a SRA spokesman.
ACS:Law is also being investigated by the SRA.
ACS:Law declined to say how many of the cases it is pursuing have been settled out of court or how many have been dropped but Mr Crossley said that "some are in court at the moment".
The process used by ACS:Law has courted controversy because the accuracy of methods used to identify pirates.
Experts argue that an IP address cannot be used as evidence in court because it is not proof that the owner of the PC was actually responsible for the downloading.
Hundreds of people have complained to consumer watchdog Which?, saying that they have been wrongly accused, including pensioners who claim they don't know how to download content.
It has caused distress to some of the accused, particularly as some of the content they are accused of downloading is hardcore pornography.
The Murdochs were wrongly accused of illegal file-sharing
"My clients are losing money because of copyright infringement and they are equally upset that their copyright is being stolen," said Mr Crossley.
He declined to identify any of the clients represented by DigiProtect, beyond saying "there are a variety, some in music, some computer games and some in adult content movies".
In the UK the government has toughened its stance on illegal downloading and its new policy, if approved by the parliament, will see letters sent to people believed to be involved in illegal downloading
"The notifications will "guide recipients towards legal services" and "may refer to the prospect of court action", according to UK music industry representative BPI.
The BPI said it has no intention of following a similar path to ACS:Law.
But Mr Crossley threw down the gauntlet to other rights holders.
"I think the BPI is letting its members down. I think they are scared of alienating their customers," he said.
"My clients don't have the same fear. They take the view that the people they target aren't their customers because they are stealing from them," he said.
Mr Crossley said that the copyright owners got a fair share of the revenue generated by the process.
"After my expenses the copyright owner is the largest single beneficiary," he said.
Another law firm has recently begun issuing similar letters.