Steve Madden sues EBay over watches

* Suit over allegedly counterfeit watches sold on eBay

* Lawsuit seeks unspecified damages

CHICAGO, July 21 (Reuters) - Footwear and accessories maker Steven Madden Ltd (SHOO.O) sued online marketplace giant eBay Inc (EBAY.O) on Tuesday over purportedly fake watches being sold on its web site.

The lawsuit filed in U.S. District Court in Manhattan claims that unlicensed watches bearing the Steven Madden brand name made by former licensee Vestal Watch Inc were being sold on eBay's online auction website. It accuses eBay of trademark infringement.

According to the complaint, Steven Madden representatives allegedly sent cease and desist letters to eBay, requesting they remove the unlicensed watches from their website.

"Instead, eBay, for its own convenience and profit, has failed to take any steps to police the eBay auction site to the detriment of Madden," the complaint says.

Steven Madden is seeking unspecified compensatory and punitive damages.

Neither EBay nor Vestal Watch immediately responded to requests for comment.

A host of companies from Tiffany & Co (TIF.N) to French luxury giant LVMH (LVMH.PA) have taken eBay to court in recent years over allegations of fake trademarked goods on its site.

EBay has always maintained that it is the brand holders who are best equipped to recognize fakes, but that it works with these owners to remove fraudulent goods on its site once alerted.

The San Jose, California-based company said last year it takes down more than 90 percent of fake goods from its site within four hours of their posting after being alerted by trademark holders.

EBay's stock closed up a half a percent on Tuesday at $18.93 on the Nasdaq, while shares of Steven Madden fell less than 1 percent to close at $27.94.

(Reporting by Ian Sherr)