YOUKU, China's largest online video site, is countersuing Tudou, the No. 2 site, after the latter said it would launch a 150 million yuan (US$24 million) lawsuit for infringements of patented contents.

Youku is demanding a 4.8 million yuan (US$761,900) compensation and the case has been accepted by Beijing's Haidian District Court, according to a court filing yesterday.

Youku claimed it has suffered losses in its share price after Tudou announced in December it would launch the lawsuit. It also claimed that it has lost advertising customers because Tudou's accusation has damaged its reputation.

Tudou's lawsuit was the result of Youku's illegal airing of entertainment programs, one of which Tudou has paid more than 10 million yuan in exclusive patent fees.

The case highlights the increasing pressure of online video sites to attract customers with high quality programs as costs to acquire patented content are rising.

Youku is listed on the New York Stock Exchange and Tudou is trading on Nasdaq. Both firms lost money in the third quarter last year.

Despite booming advertising sales, domestic websites have struggled to generate profits due to competition.