In a federal lawsuit filed in New York, Michael Kors accused Costco of a bait-and-switch scheme. It says Costco advertised the bags as starting at $99, but didn't actually have any to sell.
Michael Kors says the ads intentionally exploit the popularity of its bags, which can retail for several hundred dollars, and lure consumers away from authorized retailers.
Costco has also been sued recently by Tiffany & Co. for alleged illegal use of its trademarks.
The lawsuit seeks a halt to the ads along with damages.
Costco Wholesale Corp. officials didn't immediately return an email seeking comment.