The battle over copyright infringement between X17, Hollywood’s leading celebrity photo agency, and blogger Mario Lavandeira, of the most-visited celebrity blog Perez Hilton, is like a tabloid catfight they would cover, except this time they’re the stars.

According to X17, Lavandeira and other celebrity gossip bloggers have been stealing the firm’s images, so the photo agency has struck back by launching its own celebrity blog, X17Online, along with a $7.5 million against Lavandeira that could potentially change celebrity blogs forever.

X17Online was started in summer 2006 with hopes of accomplishing many goals. “We thought given the number of people that were stealing our material and profiting wildly from it online that we need to be exploiting our own material and fighting against them,” says co-founder and X17Online manager Brandy Navarre. “That’s not the only reason. We also started a blog because it’s fun, it’s dynamic.”

The blog is driven by visual content, using the plethora of material from the X17 photo agency to get its stories. Unlike other celebrity gossip blogs that use other material and news reports, X17 writes and shows all original content. “Our photographers have really become reporters, doing news gathering,” Brandy says. “It’s what makes us different.”

The most recent story X17Online broke was the exclusive video of post-rehab Britney Spears mocking her manager and fans, which is now all over the Internet and television.

Different is also a good way to describe the X17 photo agency. Husband and wife team Brandy and Francois were traditional journalists before starting X17 in 1997. Brandy holds a master’s degree in broadcast journalism from the University of Southern California and worked for Reuters in Spain and the U.S. while Francois worked for the French newswire AFP and photo agency Getty Images. They are now running one of Hollywood’s leading celebrity photo agencies and have 50 photographers.

Their background in traditional journalism may be a reason why they believe their blog needs to uphold traditional media standards. “I don’t think the Internet was ever intended not to abide by copyright law,” Brandy says. “It’s only the people who have publications on the internet who seem to have this idea that the internet doesn’t need to follow the same rules and regulations as print and TV.”

According to Brandy, X17 filed the lawsuit against Perez Hilton because it is the largest celebrity blog stealing their images. After multiple contacts and cease and desist orders to Lavandeira, Brandy felt she had no choice but to take legal action.

“It would be dangerous to allow it to continue to happen,” Brandy says, “then everyone would be like, ‘If he’s getting it for free, why should I be paying?’ People are asking that question already. ‘He’s had it up for five hours, why should I pay a thousand dollars?’

“It puts us in a difficult situation with our clients. We don’t want to go to court, but we are serious about copyright protection. And if people are going to steal, we’re going to have the law enforced.”

Brandy sees the future of celebrity reporting in websites and blogs. “We expect that the budget [for magazines] will kind of flip-flop and move over to their dotcom so that the dotcom will be able to license photos immediately and possibly have an exclusive,” Brandy says.

“Most online sites have low budgets. In the meantime, we will exploit our own material on our own business.”