torrentfreak.com has acquired a document how a british company is tracking down illegal use of P2P: This is How We Catch You Downloading.
Basically they use a modified P2P client which searches for infringing content, download it and if that works and is indeed is the content then they do a whois on your IP and send a infringement notice to your ISP. The best thing is that they claim that this provides enough proof that you really are infringing.
They probably never heard about botnets.