US IT giant IBM has dropped a lawsuit filed against a former employee Joanne Olsen after she quit the company to join rival firm Oracle in June.
In response, Oracle launched a lawsuit of its own in the US District Court in San Francisco.
Both company's have agreed to voluntarily drop the cases, news agency Reuters has reported.
IBM has sued Joanne Olsen for violating a clause in her contract with the company, which required her to wait for a whole year before joining a competitor.
According to new court documents, both companies have dropped the charges against each other, indicating at an out-of-court settlement.
Representatives from both the companies were unavailable for comment.
The lawsuits also represented the increasing market competition between the two companies, following Oracle's $5.6 billion acquisition of Sun Microsystems in January, allowing Oracle to challenge IBM in the enterprise server market.
Oracle CEO Larry Ellison has announced that he plans to overtake IBM in the enterprise server market.