There's a brand new game sweeping the internet: Nastygram. If you haven't heard of it, you will soon – especially if you've been getting your games from peer-to-peer networks.

Like many games, Nastygram starts with a cut-scene. It shows a group of lawyers hunched over a PC, scanning P2P networks for people sharing their clients' games. They log the IP addresses, get a court order forcing ISPs to identify the offenders, and bash off a Nastygram to each one. The cut-scene ends, the game begins and each player has to make a choice: hand over £300 now, or wait a few months and then hand over sixteen thousand quid.

Scary lawyers

Okay, it's hardly Gears of War, but as Londoner Isabella Barwinska discovered this week, lawyers can be much scarier than space monsters. A court found Barwinska guilty of sharing the Dream Pinball 3D game online, and fined her a staggering £16,000: six thousand in damages, and ten thousand in legal costs.

Barwinska is one of around 500 file sharing users who had been sharing Topware Interactive's game on peer-to-peer networks. The firm's lawyers offered to settle out of court for £300, but Barwinska decided to fight. She lost.

That's bad news for the three other file sharers currently awaiting court judgements for sharing the game, and it could be bad news for anybody who has downloaded a dodgy copy of any commercial game from file sharing networks.

Because such networks share files as they're being downloaded, every downloader is an uploader and every uploader is potentially another Isabella Barwinska.

More fines on the way

The case has set an important precedent, as Struan Robertson, technology lawyer with Pinsent Masons explains. "The law that applies to file-sharing is already established, and the Barwinska case did not change that – but it is a significant ruling because it is the first damages award of its kind," he says.

"Unlike the US, our courts generally don't award punitive damages – so Barwinska could only be made to compensate Topware's losses. Those losses are difficult to calculate."

Rather than fine Barwinska the price of the game, "the court has awarded a figure that is probably based on an estimated number of downloads made available by Barwinska's file-sharing – though we haven't seen the judgement yet."

Cost of sharing

That's likely to open the floodgates for similar action by other publishers. "They have been deterred in the past by the cost of taking action against individuals, when the awards might be trivial. It's not just the risk of negative PR that prevents action," Robertson says.

"The Barwinska ruling will encourage other rights holders to take action."

So should the prospect of a large-scale crackdown on file sharing worry us? There's certainly something chilling about lawyers demanding money with menaces from alleged file sharers, particularly if they identify people with the same accuracy as the "let's sue grannies and dead people!" team at the RIAA.

If you or a member of your family is wrongly identified as a dodgy downloader, clearing your name in court could be a very risky business – and an expensive one, too, because even if you win you still need to pay your lawyers.

Costing the industry cash

Downloading games costs the games industry money. According to Roger Billens of Davenport Lyons, the lawyers representing Topware Interactive, "In the first 14 days since [they] released Dream Pinball 3D it sold 800 legitimate copies but was illegally downloaded 12,000 times."

Not all downloaders are doing it to try before they buy, and the suggestion that downloaders don't have an effect because they wouldn't buy the games anyway is pretty far-fetched.

If developers are losing money, they may dump the PC market altogether. In April, Cevat Yerli of Crytek – the developer of Crysis – said that the firm would no longer develop just for PCs. "I believe that's the core problem of PC gaming: piracy," he said.

"PC gamers that pirate games inherently destroy the platform."

According to P2P monitoring firm Peerland, titles such as Battlefield 1942 can rack up 1.5 million illegal downloads in a single week.

"We can't earn money from gigging"

Games developer Cliff Harris solicited gamers' opinions on piracy, dumped DRM and dropped his prices as a result – but that doesn't mean he's a fan of the file sharers.

As he points out, music pirates say that artists can make money from gigs and merchandise. That's not an option for game developers. "We can't earn money from gigging," he says. "Given that almost everyone who plays games is online, and most of them have broadband, it's actually a worse problem for the games industry than the music industry."

Pay the fine

While he doesn't have much sympathy for Barwinska – "If I get fined for speeding I pay the fine. I certainly don't ignore the problem and hope it goes away. If I did, I'd be in big trouble". Harris thinks things need to change.

"I hope we don't have to see more cases like this," he says. "I hope that people sharing games start to realise the damage they are doing, and that people making games start listening to their customers more. We are at a crossroads where we can go the same way as the music industry, or we can take a more sensible attitude. One side needs to start listening to the other, rather than fighting."

What do you think? Is piracy killing PC gaming, or is it nonsense to say every illegal download is a lost sale? Let us know in the comments.