When Urban Outfitters used the Navajo name to describe a line of merchandise that included a flask and panties, they were criticized for their insensitivity. Now, they could pay dearly for it.

The Navajo Nation has filed suit alleging that the retailer has infringed its trademark and violated the federal Indian Arts and Crafts Act, which makes it illegal to falsely suggest that merchandise is made by American Indians when it is not.

Items purchased from Urban Outfitters' Navajo line are shown in Tempe, Ariz. (Matt York/AP)

“The fame or reputation of the Navajo name and marks is such that, when defendant uses the ‘Navajo’ and ‘Navaho’ marks with its goods and services, a connection with the Navajo Nation is falsely presumed,” the lawsuit states.

The products, which appeared in stores and online in fall 2011, were renamed after the Navajo Nation sent a cease and desist letter to the company. The retail chain may defend itself by claiming that there is minimal likelihood that consumers would confuse their products with native handicrafts.

This isn’t the first time that Urban Outfitters has gotten in trouble for its wares. Check out this list of the most offensive merchandise from the last 10 years.