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According to a Youku spokesperson, Youku served Sohu with two suits – one for defamation and the second for copyright infringement – Thursday morning in the Beijing Haidian District Court. Within the filings, Youku claims that Sohu has long broadcast exclusively copyrighted Youku videos and has damaged Youku’s reputation, for which it is owed an apology.

The motions come days after several local news sources reported that the Chinese Online Video Anti-Piracy Alliance, reportedly headed by Sohu, Joy.cn and Union Voole Technology Company, plans to sue Youku for the piracy of more than 500 TV episodes and movies. The story being reported by Media Magazine said, Sohu and its partners created the Alliance to protect video copyrights in the market, and had additionally referenced Tudou and Xunlei, among other sites, to be the recipients of future suits. People’s Daily also noted that the Alliance also intended to sue companies such as Pepsi and Coca-Cola for having advertised on unlicensed Youku videos.

The People’s Daily report quoted a lawyer for the Alliance as saying legal motions would be taken over the coming year and the compensation sought from Youku would range between Rmb 50 to Rmb 100 million (US$7.3 to $14.6 million).

Media Magazine said Youku has singled out Sohu in its lawsuits because “this idea of an ‘alliance’ exists mostly in the heads of Sohu. As far as we can tell, Sohu is flying solo”.

The source noted that “at this point Sohu or its so-called ‘alliance’ has not taken any legal action against Youku”, and publicly suggesting that it would do so is grounds for defamation.

“Sohu's motives in doing this are totally transparent to anyone who knows this space. It is currently trying to promote its own video service, and so it is going after the industry leader in what amounts to a shameless publicity stunt,” the spokesperson continued. “Sohu's hypocrisy in this matter is clear to anyone familiar with their own record with respect to intellectual property, and undermines any credibility they may have in this matter.”

Youku’s representative further contended that the site had complied with China’s copyright law, leaving the Alliance’s claims baseless: “Youku has content licensing agreements in place with more than 1,500 content partners, and we lead the Chinese video market in content co-operation. Youku responds with alacrity to all requests from legitimate copyright holders.”

Youku.com launched in 2006 by founder and CEO Victor Koo. Prior to Youku's launch, Koo served at different times as Sohu's president, COO and CFO, departing the company after six years in 2005.

Youku claims 150 to 160 million videos unique visitors a month, with an average of 150 million video views a day and 4.5 billion per month, and currently claims more than 50 per cent online video market share. It is engaged with more than 250 film, TV and music partners to broadcast its content, and works with companies such as Nokia and Taobao to reach a broader audience base.

Be interesting now to watch the other online video sites and what their reaction would be... maybe they may join the suit or just take a wait,  watch and see approach... interesting times