i bet u cant name even one individual that has been sued...b/c there isnt any..
i think your confused it with bittorrent or napster..lol
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The server has to know which headers or messages to send to whichever IP made the request. Logs are kept for diagnostics.
The provider can see what it wants to see. Whether they choose to monitor any given user is their decision.
Don't confuse not doing it with not being able to do it. They are able.