How is it legal? Do they get permissions from copyright owners?
The shady part is where they can just go to the ISP and request the personal customer information associated to an IP they believe is transferring the infringing content.
In Germany the law allows lawyers to ask and get this info from the ISP purely based on suspicion. This is the dirty secret related to how Germany enforces piracy laws. Getting internet access is predicated by accepting that this information will be passed on to private third parties (imagine getting internet access only if you agree to send your identity to Facebook if they want to check you are not violating FB rules by using a fake name).
Between this and the fact that a lawsuit is expensive and time consuming, they probably never pursue minor infringement in court if they get a counter from the user's lawyer.