A website that allowed users to share subtitles has been taken offline after the Swedish police raided two properties used by the service.
Undertexter had provided fan-made translations of film and TV show dialogue, which could be merged with video files to provide on-screen text.
A spokesman for the police told the BBC they had acted after investigating a complaint by copyright holders.
Undertexter's managers insisted they had not broken the law.
Critics have suggested the raid marked an escalation in Hollywood's efforts to protect its intellectual property.
However, the Rights Alliance - the organisation that prompted the police to act - said it was not the first case of its kind in Europe.
Forensic testsThe national co-ordinator of the intellectual property crime division at the Swedish Police Service said that it had carried out the raid after tracking computers using Undertexter's internet addresses to buildings in Stockholm and Helsingborg.
"Our copyright law doesn't allow people to make a transcript from a film that is copyright-protected without the copyright owner's permission and certainly not to make it public," said Paul Pinter.
"The investigation is still in its early stages. Our forensic experts will now go through the material on the seized computers and there will be follow-up interviews."
He added that potential penalties ranged from fines to up to two years in jail.
The Rights Alliance said its members had been concerned that Undertexter had "a lot of" adverts on it, suggesting the owners were profiting from "the work of others".
"There were several reasons for us to act against the site," said Sara Lindback, a lawyer for the group.
"The movies they put subtitles on have often not yet reached Sweden or are still in cinemas. The translations have not been cleared by the rights-holders."
She added that the move followed the trial of a man in Norway last year who had run Norsub, a similar service.
A judge fined the 26-year-old 15,000 kroner ($2,450; £1,640) after hearing he had not profited from the site and had shut it down shortly after being warned he was breaking the law.
'Free country'A post on Undertexter's Facebook page indicated its managers intended to fight on.
"Hollywood... we will never give up, we live in a free country and Swedish people have every right to publish their own interpretation of a movie/series," they wrote.
They added that they had never charged for the service.
Rick Falkvinge, a civil rights blogger and founder of Sweden's Pirate Party, has come out in their support.
"Fan-subbing is a thriving culture which usually provides better-than-professional subtitles for new episodes with less than 24 hours of turnaround, whereas the providers of the original cartoon or movie can easily take six months or more," he wrote on his site.
"What's remarkable about this raid is that the copyright industry has decided to do a full-out raid against something that is entirely fan-made."
Ernesto van der Sar - editor of the Torrentfreak news site - also questioned the wisdom of the move.
"These subtitles are created by the most passionate fans the industry has and they are not in any way out to make a profit," he told the BBC.
"These sites exist because they offer a service to the deaf and foreign language audience that's often lacking through legal channels."
However, the Rights Alliance defended its actions.
"See the movies, but make sure that the ones that created them are the ones that get paid, not the pirates," said Sara Lindback.
"That way new movies can be made, which benefits everyone."
She added that her organisation now intended to act against other subtitle services including Swesub.
The Swedish Police Service was not able to provide comment about other sites.
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