PeopleSoft has sued Oracle seeking an order barring Oracle from proceeding with its hostile takeover bid for PeopleSoft.
PeopleSoft has accused Oracle of unfair business practices, trade libel, and tortious interference with PeopleSoft's customer relationships.
Oracle launched its bid only to undercut PeopleSoft's business operations, undermine its viability and interfere with the proposed takeover of JD Edwards, PeopleSoft said.
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The announcement of the lawsuit, comes after JD Edwards filed two lawsuits against Oracle. JD Edwards is seeking damages and an order that will block Oracle's bid for PeopleSoft.
On 2 June PeopleSoft announced it had agreed to buy JD Edwards. Oracle launched a hostile $5.1bn (£3bn) takeover bid for PeopleSoft on 6 June.
PeopleSoft and JD Edwards both compete with Oracle in the enterprise applications market. Combining the two companies would create a bigger competitor for Oracle, analysts have said.
PeopleSoft said its board of directors voted unanimously to recommend shareholders reject Oracle's bid. JD Edwards have strongly backed PeopleSoft's rejection of Oracle's bid.
The PeopleSoft lawsuit expands the high-stakes battle over Oracle's attempted takeover of PeopleSoft. Oracle said PeopleSoft had decided not to go to court.
"PeopleSoft seems to have revived its on-again, off-again litigation strategy," Oracle said. "This matter must be decided by PeopleSoft shareholders and not by frivolous litigation."
Joris Evers writes for IDG News Service