Five Hollywood studios have sued a Chinese online service and internet cafe they accuse of offering pirated downloads of Pirates of the Caribbean and other hit films, state media reported on Thursday.

Beijing-based and an Internet cafe in Shanghai face a legal showdown with Twentieth Century Fox, Walt Disney, Paramount Pictures, Columbia Pictures, and Universal Studios, the Xinhua news agency reported.

The film-makers allege created software the cafe used to run a movie download business, and they are demanding 3.2 million yuan ($432,000) in compensation, Xinhua said. promotes itself as My on-line cinema and claims to be China's biggest film download provider with close to 30,000 movies and television series customers can copy onto computers.

A company official, Xie Jiangping, refused to comment on whether it had violated the film companies' copyright, said Xinhua.

A statement on the Web site says its vast range of entertainment is legally obtained through content providing partners who sign copyright contracts.

The case to be heard in Shanghai promises to be one more skirmish in a battle of words and legal threats between China and the United States, which says the rough-and-tumble Asian economy does far too little to stop commercial pirates.

Washington has complained to the World Trade Organization that slipshod Chinese rules have allowed a booming industry in pirated American goods, including movies and software, costing American firms billions of dollars.

On Chinese streets, pirated DVDs cost as little as $1, much less than legitimate copies sold in wealthy countries. And Web sites offering downloadable entertainment are popular among the country's tens of millions of Internet users.

China says its intellectual property safeguards meet international standards and the government is determined to stamp out piracy, though the effort may take many years.

The studios say and the cafe distributed 13 films without permission, including X-Men 2 and Night at the Museum, Xinhua reported.

Other U.S. companies have sued and won against Chinese copiers. In September, studios won damages from a Beijing business selling copies of Lord of the Rings and other popular films.

(Reporting by Chris Buckley, editing by Mike Collett-White and Paul Casciato)