The Commercial Court has begun hearing a challenge by a number of record companies aimed at forcing telecoms company UPC to disconnect customers responsible for illegally sharing and downloading copyrighted music.

Sony Music, Universal Music and Warner Music are seeking a "graduated response" mechanism that may lead to disconnection, similar to that operated by Eircom.

Sharing files over the internet is not illegal unless the material is copyrighted by a third party.

Record companies claim they are losing millions each year as a result of people in Ireland illegally downloading and sharing copyrighted music through file-sharing websites.

Since it struck a settlement with record companies in 2009, Eircom has been operating a "graduated response" or "three strikes and you are out" policy.

It said it warns offenders that what they are doing is against the law, provides them with information about the alternative ways to get their music and finally disconnects them if the first two warnings are not heeded.

Music labels then took UPC to court in 2010 to force it to block access to illegal download websites. However, it lost that case.

The Government subsequently amended the law in 2012 to enable record companies to seek court orders forcing telecom companies to block websites that facilitate illegal downloading of copyrighted material.

Since then, record companies have successfully sought orders forcing a number of record companies to block specific websites.

Opening the companies' case, Senior Counsel Michael McDowell said the graduated response system is a reasonable, achievable, practicable and affordable step for UPC to take in response to a situation that all accept is causing grave damage to copyright holders.

He said such a system had already been agreed with Eircom, and the record companies are contractually bound by that agreement to seek to implement similar agreements with other internet service providers in Ireland.

Mr McDowell said the evidence is that the system works.

However, he also left open the possibility that another system could be put in place if it was acceptable to the court and the music labels.

He said the record companies are seeking a particular formulation that is reasonable and practicable, but the law does not say it is the only injunction available.

The court heard that there is a dispute between the two sides about the costs involved in implementing a graduated response system.

Mr McDowell said the record companies consider UPC's estimation of the costs involved as excessive.

However, he said it is agreed by both sides that UPC has 28.5% of the fixed line broadband market and that a substantial number of its customers or their children are using the service to illegally share music.

He claimed that blocking of individual websites, such as Pirate Bay, does not address the issue, because of the nature of peer-to-peer technology.

Claims of competitive advantage

Mr McDowell accused UPC of having a deliberate policy of not adopting the graduated response system in order to have a competitive advantage.

He said the company claims to be a mere conduit for those who carry out illegal downloading and that it is not liable for the acts.

But Mr McDowell alleged that UPC has made a policy decision that it intends to stick by and to do nothing to assist the copyright owners, unless they are obliged to do so by legislation or court order.

He claimed people who wish to steal copyrighted material can do it with impunity on UPC's network, which places Eircom, who operates the graduated response system, at a competitive disadvantage.

However, counsel for UPC, Cian Ferriter, said that was an unfair and serious allegation that was not borne out by the evidence.

He said it ran directly contrary to the position agreed by both sides that UPC is a mere conduit or an intermediary.

Mr Ferriter said apart from Eircom, no other ISPs have agreed to the graduated response system.

He said there was no evidence to prove the claim that customers flock to UPC as it is known to tolerate illegal downloading on its systems.

Mr Ferriter said the graduated response system is not provided for by the existing legislation.

The case is expected to last eight days before Mr Justice Brian Cregan.