The music mogul's record label Syco has accused the Californian punk band - who share the name of the British boy band he put together on 'The X Factor' in 2010 - of attempting to ''cash in'' on the boys' success and filed a law suit last Thursday (21.06.12) counter-suing them for fraud.
Syco stated: ''[US One Direction] is guilty of fraud, oppression or malice, and by reason thereof, [UK One Direction] are, in addition to their actual damages, entitled to recover punitive damages.''
The popular UK group - consisting of Zayn Malik, Louis Tomlinson, Liam Payne, Harry Styles and Niall Horan - cracked America this year and became the first British band to go straight to the top of the US Billboard charts with their debut album 'Up All Night'.
However, US punk band One Direction attempted to sue Syco and Sony Music for $1 million in damages in April because they say they have been using the name since 2009 and have applied to trademark it.
They also claim to be entitled to the British boys' profits because they have suffered ''substantial confusion and substantial damage''.
Syco has now hit back, saying they have ''devised and perpetrated a scheme to exploit the goodwill'' of the British 'One Thing' hitmakers.
The company added that they have ''continuously and consistently been utilising the ONE DIRECTION Mark since ODUK made its public debut on the popular British television programme 'The X Factor' in The Fall of 2010.''
The American band's attorney Peter Ross has retaliated, saying that Syco are trying to ''intimidate'' his clients.
He told The Hollywood Reporter: ''It looks like we got defendants' attention. This is the response we expected, given who we're up against. An effort is being made to intimidate these young men from California. Our clients believe in their case and will not be deterred.''