Callanen International Inc. filed a lawsuit Wednesday to stop Fossil Inc. from producing and selling Guess Inc. watches.

The lawsuit alleges that Fossil’s recent move to ink a licensing deal with Los Angeles-based Guess has interfered with Callenen’s contract to make Guess watches. Callenen, a subsidiary of giant watch maker Timex Corp., said its exclusive right to distribute Guess watches doesn’t expire until Dec. 31, 2006.

Last week, Fossil and Guess announced they were in advanced negotiations for a 10-year licensing agreement under which Fossil would make Guess watches beginning January 2007. The companies plan to base minimum royalties on wholesale sales of $1.36 billion over the initial term of the agreement, which the companies have option to renew.

Callenen alleges that the proposed deal violates federal antitrust and state unfair competition laws. The lawsuit was filed in the U.S. District Court for the Central District of California.

“Fossil’s actions have been motivated by a specific intent to monopolize the market for fashion watches by significantly eliminating effective competition, controlling prices and preventing entry or expansion into that market,” Callenen’s complaint states.

Guess watches generate about $150 million in worldwide sales. For the 2004 fiscal year, Fossil generated $781 million in total revenue.