Telus says it wants an injunction against the Toronto-based carrier to stop it from advertising, broadcasting and distributing the ads, which began in late November.
The Vancouver telecom says Mobilicity is making false claims in general about other carriers placing limits on unlimited calling plans by restricting them to evenings and weekends, for example. Telus says it has no such restrictions.
But Mobilicity says Telus is using intimidation and is targeting it as a small player in the wireless market.
Mobilicity chief operating officer Stewart Lyons says his company has been repeating the same message for more than two years.
Mobilicity and Telus will be in court in Vancouver this Friday. Lyons also said Telus is suing Mobilicity over the ads, but didn't provide a dollar amount.
"It kind of feels like big guy to little guy intimidation," Lyons said from Toronto.
Lyons said Mobilicity, which offers no-contract cellphone service, is trying to educate the public about alternatives to three-year cellphone contracts.
"In the middle of the Christmas season, here comes Telus trying to shut down the little guy."
But Telus noted that December is busiest season for wireless carriers, the company said in court documents.
"We could not let that go unchallenged in such a hotly competitive market where we could potentially lose business over such mis-information," said spokesman Shawn Hall.
Telus argues in court documents that Mobilicity is misrepresenting itself by saying it offers consumers no-contract service because there are "terms" attached to its services.
Lyons said Mobilicity customers pay for their cellphones up front, often on sites such as Craigslist, and pay "low monthly rates."
In addition, Telus argues that Mobilicity does not provided inlimited data because it uses "traffic throttling" to intentionally reduce data speeds when customers exceed certain data usage levels.