Lucas Design International executives claim that they were approached by the America's Got Talent judge last year to create a range of products for her to sell on the Home Shopping Network.
The firm is seeking unspecified damages from the TV personality, asserting that she unlawfully backed out of the oral contract, but a spokesperson for Osbourne has insisted that the lawsuit is without merit.
Her representative told TMZ: "Sharon Osbourne did not breach any oral contract with Lucas Design because no agreement existed.
"Sharon is looking to create her own jewellery line and did have discussions with Lucas Design. Unfortunately the designs and pieces submitted were not the quality that was represented or hoped for. Sharon has moved on."
Osbourne recently said that she will be "the grandmother from hell" to her son Jack Osbourne's first child with fiancée Lisa Stelly.