The R-rated film follows "two clashing detectives" -- Melissa McCarthy and her partner, a puppet named Phil Phillips -- in Los Angeles as they work together "to solve the brutal murders of the former cast of a beloved classic puppet television show," according to its website.
But it's not the film's use of profane puppets that "Sesame Street" is upset about. It's the tagline used in the film's marketing campaign -- "No Sesame. All Street."
In the lawsuit obtained by CNN, Sesame Workshop, the educational organization behind the long-running childrens show, argues that STX Entertainment does not have the right to use "Sesame Street" in its tagline.
The lawsuit particularly cites use of the tagline in the film's "just-released trailer with explicit, profane, drug-using, misogynistic, violent, copulating, and even ejaculating puppets."
They argue that the tagline "deliberately confuses consumers into mistakenly believing that Sesame is associated with, has allowed, or has even endorsed or produced the movie and tarnishes Sesame's brand."
Please see our statement below regarding the STX film. pic.twitter.com/m1OEM6npIB— Sesame Workshop (@SesameWorkshop) May 25, 2018
The film is directed by Brian Henson, son of late puppeteer Jim Henson, who helped develop characters for "Sesame Street" and created the Muppets.
An STX spokeswoman issued a statement on Friday, attributed to a puppet lawyer named Fred, Esq.
"STX loved the idea of working closely with Brian Henson and the Jim Henson Company to tell the untold story of the active lives of Henson puppets when they're not performing in front of children," the statement said. "While we're disappointed that 'Sesame Street' does not share in the fun, we are confident in our legal position. We look forward to introducing adult moviegoers to our adorably unapologetic characters this summer."
The lawsuit asks for a jury trial, punitive damages and that "The Happytime Murders" change its advertising.
CNN has reached out to Sesame Workshop for further comment.
"The Happytime Murders" is set to hit theaters on August 17.