Shannon Lee's Bruce Lee Enterprises alleges Real Kungfu has used the image in its logo without permission.
The firm wants the fast food chain to immediately remove the image, and is reportedly seeking $30m (£23.1m) in compensation.
The restaurant argues local authorities approved its use of the logo.
The image depicts a dark-haired man in a martial arts pose.
"The Real Kungfu chain's logo is one that the company had applied for and obtained after a rigorous screening by the national trademark agency, we have already been using this for 15 years", the company said in a statement posted on China's Weibo platform.
"We are baffled that after so many years we are now being sued, and we are currently energetically studying the case and preparing our response."
The Guangzhou-based fast food chain, which is known as Zhen Gongfu in Mandarin, was founded in 1990 and has around 600 outlets across China.
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