Clothing giant Jones Apparel Group Inc on Tuesday filed a massive $550 million lawsuit against Polo Ralph Lauren Corp after last-ditch talks to resolve a dispute over a lucrative women's clothing licence collapsed.

The New York-based firms have spent months trying to reach agreement on an orderly transition of the licence but the matter will now be decided in court with Polo issuing a countersuit against Jones.

Jones' suit is against Polo and its affiliates, as well as against Jackwyn Nemerov, a former president of Jones Apparel Group, alleging breach of contract over the Lauren by Ralph Lauren licence.

It alleges the defendants embarked on an unlawful plan to take the Lauren licence back from Jones by claiming it expires at the end of 2003. Jones believes under an existing agreement, it owns the exclusive US and Canadian rights to use the Lauren trademark through the end of 2006.

Jones revealed in a separate announcement it plans to launch a rival line to the Lauren label under its Jones New York label, adding the new apparel brand could be further extended into footwear and accessories.

In its lawsuit, Polo said it is seeking, among other things, an injunction and a judgment that the Lauren licence expires on December 31, pursuant to the terms of a separate cross-default agreement the parties signed.

Polo alleges the earlier expiration was started when Jones failed to meet a minimum sales level required to renew the Ralph licence.

"The complaint details that Polo solicited assistance from Ms Nemerov in order to gain this expertise," Jone said in a news release.

"Polo is alleged to have induced Ms Nemerov to breach the confidentiality and non-compete provisions of her employment agreement with the company, and Ms Nemerov is alleged to have induced Polo to breach the Lauren agreements, in order to produce future lines of Lauren products."

It added the dispute does not relate to the Polo Jeans licence, and an expiration of the Lauren and the Ralph licences does not end Jones' longer term Polo Jeans licence or otherwise adversely affect the Polo Jeans licence in the US.

Polo president and COO, Roger Farah, hit back: "We regret taking this action, but we felt we had no choice but to seek immediate court relief from what we believe is obstructionist behaviour from a business partner that may irreparably damage our brands.

"We believe that we are well within our legal right to reclaim our licences. We are confident that the court will enforce our clear contractual rights enabling us to serve our customers without interruption."

Commenting on the new women's lifestyle line for sale in department stores, Jones CEO Peter Boneparth said: "We are confident that this Jones New York brand will meet the standards we have set with our retail partners.

"Total company sales under the Jones New York umbrella label will approximate $730m for 2003. With this launch, I believe the Jones New York label could exceed $1 billion in sales in 2004."