A group called the U.S. Copyright Group (USCG) has filed a lawsuit against thousands of as yet unknown people who may (or may not) have downloaded or uploaded movies on file sharing networks. The strategy, which has been employed by others in the past, is to file or threaten to file a lawsuit and then offer to settle for a few thousand. Defending a copyright lawsuit will almost certainly cost much more so the offer is tempting. Plus, copyright law allows statutory damages of up to $150,000 per work, so the potential risk can be severe.
One problem with employing this strategy on the scale that the USCG is doing is that it will almost certainly result in a large number wrongly identified people who feel compelled to pay up because its cheaper than fighting. It undermines rights to privacy and anonymity. Furthermore, it doesn’t get to the real issue of how to compensate artists for their work. Lawsuits can’t possibly be a realistic long-term business model.
As far as I know, the USCG only has a large list of suspect IP addresses and is currently attempting to obtain the identities of people so they can give them the pay up or go to court offer. The Electronic Frontier Foundation has created a resource for people who are faced with responding to a subpoena and would like advice with responding. I have volunteered to work with people in Minnesota who are faced with this situation. There are other attorneys in other states who have volunteered as well.