The European Commission believes ISPs need to take urgent steps to combat online intellectual property theft.
The EC has published a report on the effectiveness of its own 2004 Directive on Intellectual Property Rights to highlight the extent of online piracy activity.
The EC has stated that despite an overall improvement of enforcement procedures, the sheer volume and financial value of intellectual property rights infringements is alarming.
"One reason is the unprecedented increase in opportunities to infringe intellectual property rights offered by the internet. The Directive was not designed with this challenge in mind," the report said.
According to the report, file-sharing of copyright-protected content has become ubiquitous, partly because the development of legal offers of digital content has not been able to keep up with demand, especially on a cross-border basis, and has led many law-abiding citizens to commit massive infringements of copyright and related rights in the form of illegal up-loading and disseminating protected content.
"Many online sites are either hosting or facilitating the online distribution of protected works without the consent of the right holders. In this context, the limitations of the existing legal framework may need to be clearly assessed," it said.
Julian Heathcote Hobbins, general counsel at the Federation Against Software Theft (FAST) said it is paramount to the future of innovation and creativity that the law keeps pace with technological developments.
The creative industry was one of the few growth areas during the last recession, and it continues to be vital for wealth generation, therefore, he said, online piracy must be taken seriously and dealt with if we are to protect and nurture creatives and entrepreneurs.
"It is clear that people are not aware of the knock-on effects that online piracy can have on creators. The Internet has evidently increased opportunities all round, but it is also a vehicle to infringe intellectual property rights on multiple levels. It is a factor that needs to be continually reviewed closely," said Heathcote Hobbins.
John Lovelock, chief executive of FAST, said it must be in the ISPs' commercial interest to work with rights holders to develop mutual business models, thus driving customers to buy legitimate products.
"This would provide both industries with a win-win; and would ensure that SME software houses are not bankrupted by having their expensive bespoke software products shared among businesses without being paid for," he said.