An Austrailian man responsible for the creation of the site mp3s4free.net was recently charged with copyright infringement and now his ISP has been named as a defendant as well. The site that got him in hot water simply linked to mp3 music files hosted on other people's sites.
I see two potentially disasterous legal precedents that coud be set by this case, and they are both found in this quote from the first article_
"The Federal Court action seeks declarations that both Mr Cooper and his ISP have infringed the copyrights of the music labels by making and/or distributing copies of copyrighted music, and seeks permanent injunctions and damages against them both."
It's going be be impossible to prove that he made copies of the music, because he didn't. They're relying on nailing him on distribution charges. So the key element in this case is the definition that the court adopts for "distribution". In my opinion, distribution is the act of actually hosting or transmitting the file.
However, if the creation of a link is acknowledged as being considered distribution (and thus copyright infringement), the results for search engines like Google could be disasterous.
The other major point is that they're trying to hold ISP's responsible for the actions of people they host. This, also, could have far-reaching ramifications for the internet community. And I can't say that I like them