Am I liable for the copyright of a downloaded movie even though I did not do it? How?

If they go after you in court, they will have to prove that you or someone that you are responsible for did it.

I have done many of these cases and they are more common then you might think. They are called copyright troll cases. I wrote an article on this very subject appearing in the June 2015 Trial Attorney magazine. First, you will need to respond, otherwise they will take a default judgment against you. Second, they are incorrect with regard to any secondary copyright liability (liability for someone else using your network). Third, settling with them only promotes the perpetuation of these lawsuits. Talk to a qualified IP (intellectual property) attorney who does copyright troll cases ASAP. There has been a recent push back against these plaintiffs and their lawyers and some defendants have gotten damage awards against them including attorney fees.

You could be liable - for example if someone used your Internet connection (wifi) to download the movie. You can wait to see if a lawsuit is filed against you - but that could cost you more than the current settlement offer. If sued - see a copyright lawyer - and file a motion to dismiss the case. You might win. The risk is that you do not. GOOD LUCK.

First of all, check out whether this is a legitimate request from an actual attorney or whether this is a scam. Second, if you haven't already, contact your ISP and talk to them about this situation. Confirm whether they actually got a subpoena to release this sort of information and, if they did, whether what they released included your personal records. Also ask if their services have been hacked during the time you "allegedly" downloaded the movie. Third, find out if anyone else had access to your IP address during that time: friends, family, visitors, etc. Finally, ask the attorney who contacted you to provide the subpoenaed information he's using to make this charge against you, the name and address of his client, and how the client obtained the rights to distribute this particular movie. Only after you confirm that there was an actual violation of copyrighted material owned or licensed by the attorney's client should you decide what to do about it. An IP attorney can help you sort through all of this. And if this turns out to be a scam, contact your state's Attorney General's Office, Consumer Fraud Division.

It is a big mistake that you made contacting that lawyer. You really should stop any and all contact with that lawyer and contact your own lawyer. You should speak with your own lawyer and ask them for advice. Generally such letters from lawyers are now illegal as copyright trolling and are forbidden by courts. The lawyer might face losing his or her license for sending such a letter. It will depend on what state you live in and what federal district. When you get such a letter, you should never ever make contact with the person that sent it. Please stop doing that and contact your own lawyer today. Lawyers such as the one that sent you that letter make all lawyers look bad and abusive. Good lawyers consider the ones that send such letters to be copyright trolls, which is much worse than being an ambulance chaser.

This is not legal advice (the last 2 sentences of your question) and you should engage and consult an attorney if you want such advice. If you did not download the movie, did not ask anyone else to do so, and did not facilitate or provide anything for anyone else to do so, you should not be liable for copyright infringement. You should tell the accuser and your internet services provider that you did not do any such thing, that nobody in your household downloaded the the movie (assuming that you have investigated and confirmed this to be the case) and that the contention is factually incorrect. In principle, despite your denial, the copyright owner could nonetheless accuse you and file a lawsuit. In that case they would have the burden of proving that you did infringe the copyright despite your denial.