Retailer Steven Madden Ltd. (SHOO) sued eBay Inc. (EBAY) Tuesday, alleging the online auction company is allowing the sale of counterfeit watches with the Steven Madden name on its Web site.

The lawsuit, filed in U.S. District Court in Manhattan, alleges eBay has failed to remove from its site all watches with the "Steven Madden" mark and those watches are unlicensed and counterfeit.

"The issue with such advertising and sales of such watches is the fact that neither Madden nor Madden subsidiaries has ever in the history of its business ever had for sale watches with any Madden name either through their own distribution (or) through licensing," the lawsuit said.

EBay didn't immediately respond to a request for comment late Tuesday.

-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com