Australian singer Jasmine Rae released When I Found You under her name in 2015, and it was the most played song on Australian country radio, according to the complaint, filed in the US District Court in NY.
Sheeran, who is listed as a co-writer of The Rest Of Our Life, joins Sony Music Entertainment and several others named as defendants in the legal action.
Sony comes in for particular criticism, with the lawsuit claiming that staff at the company were well aware of the similarities between the two songs. Tim McGraw and Faith Hill are now signed to Sony, and Holland admitted that he already knew about the songs' striking similarities.
The plaintiffs are asking for a judge to award a permanent injunction blocking the use of the song, and are seeking at least $5 million in monetary damages, according to the newspaper.
And there's more. "The Tennessean" also reports that there is a personal connection between Sony and the performer of "When I Found You", a singer named Jasmine Rae.
Doug Marrone: Steelers have 'most talented roster that we play'
He's healthy for the start of these playoffs despite touching the ball 406 times (321 rushing attempts and 85 receptions). Jaguars rookie running back Leonard Fournette looked as strong as any player in the league during his first five games.
A conference call was allegedly conducted during which Holland admitted to knowing about the infringing song months in advance because "he was tasked with promoting and marketing the infringing song and infringing sound recording before its release", states the complaint. "When pressed further by Plaintiffs, Mr. Holland indicated that he had known that the songs were substantially similar for more than two months prior to the October 5, 2017, release date of the Infringing Song/Infringing Sound Recording".
Ed Sheeran has been accused of plagiarising a hit song originally recorded by Australian country music star Jasmine Rae.
As an alternative theory, the plaintiffs stated that Sheeran was "touring extensively" across Australia when the track "When I Found You" was being played frequently on the radio.
Sony Music, McGraw, Hill and Sheeran have all yet to comment on the lawsuit.
The McGraw/Hill song has been popular, with more than 8 million streams of Spotify.
The pair are being represented by lawyer Richard Busch - the man who won the now landmark trial of Marvin Gaye's family against Robin Thicke and co over "Blurred Lines" and 'Got To Give It Up'.