Working with representatives from the music, movie and software industries, four of Japan's biggest ISP's have agreed to spy on users and ban those found to be sharing files illegally.

According to this article at TorrentFreak, copyright holders could track users with “special detection software” and then notify the ISP of the infringement. From the TorrentFreak article:

[ISPs would first send out emailed warnings to those traced, then interrupt the Internet connection if action to cease the activity isn’t taken. For persistent breaches, the ISP would ultimately terminate the accounts of its subscribers.]

Sucks to be on the Internet in Japan I guess.