Culver City-based online ad firm SteelHouse Inc. filed a countersuit Tuesday against French rival Criteo SA in a quickly escalating battle over how the two companies generate and track clicks that lead to web sales for their clients.

Criteo initially filed a complaint June 13 in federal court in Los Angeles alleging SteelHouse was running computer code that artificially boosted its click rate and stole clicks from competitors including Criteo.

“SteelHouse’s—or, more accurately, StealHouse’s—counterfeit click fraud has irreparably harmed and continues to irreparably harm both Criteo and the online advertising industry as a whole,” the complaint reads.

SteelHouse fired back in Tuesday’s filing alleging that Criteo was the real fraudster. The countersuit claims that the French marketing firm was manufacturing a large portion of its clicks from whole cloth.

“More than half (52 percent) of Criteo’s clicks have no attributable source. None,” the countersuit reads. “Put simply, more than half of the claimed clicks do not originate from any known website or publisher.”

The back-and-forth accusations open up the seamy underbelly of the online ad industry. SteelHouse and Criteo both operate in the “re-targeting” space, which uses consumers’ web browsing history to display ads from companies whose ecommerce site they’ve already visited. In the space, there are several different ways to measure what how many people are clicking on an ad and where those clicks were directed from.

In the initial lawsuit, Criteo claimed that SteelHouse was able to swipe several of its clients by effectively creating a system to get credit for a portion of the consumer ad clicks that were placed by the French firm. Criteo, according to the complaint, initially approached SteelHouse about the issue in April after seeing suspicious results from to a head-to-head comparison run by former client, Toms Shoes, who defected to SteelHouse.

Both companies are accusing each other of false advertising, intentional interference with prospective economic advantage, and unfair business practices among a litany of charges.

Criteo is represented by Jack DiCanio, a Palo Alto-based partner at downtown’s Skadden Arps Slate Meagher & Flom. SteelHouse is represented by Century City-based Daniel Schecter of Latham &Watkins.

Legal reporter Henry Meier can be reached at hmeier@labusinessjournal.com. Follow him on Twitter @henry_meier.

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