The hack allows users of the highly successful games console to potentially run any software on their system, including pirated PS3 games.
Sony's lawyers argue that this is an act of copyright infringement and computer fraud.
George Holtz, however, one of the hackers responsible says that he is "comfortable" that the action would not succeed.
I would expect a company that prides itself on intellectual property to be well versed in the provisions of the law, so I am disappointed in Sony's current action.
I have spoken with legal counsel and I feel comfortable that Sony's action against me doesn't have any basis.The twenty one year old, who became famous for breaking the iPhone's security is named in the lawsuit along with more than a hundred people associated with the hacking group "fail0verflow."
Sony has put in a request for a restraining order to ban Mr Holtz from further hacking and to prevent the distribution of the software produced by the hackers.
The document states,
Working individually and in concert with one another, the defendants recently bypassed effective technological protection measures employed by Sony,
Through the internet, defendants are distributing software, tools and instructions that circumvent the [protection measures] and facilitate the counterfeiting of video games. Already, pirate video games are being packaged and distributed with these circumvention devices.
The controversy is centred around a series of secret codes used by Sony to protect the Playstation 3 system from being used for unauthorised purposes.
Among the codes is a number used to "sign" all PS3 games and software as a way of telling the system that they are genuine.
However, once the key is known, it can be used to sign any software or pirated games, allowing users to run them on their system.
The PlayStation's protection had remained impenetrable for several years, but members of fail0verflow demonstrated the first breakthrough in December when they presented a security exploit at the Chaos Communication Congress in Berlin.
Mr Hotz then revealed that he had uncovered the secret signing number using a similar method.
fail0verflow's website was taken down overnight, replaced with the message "Sony sued us" and a brief statement.
"We have never condoned, supported, approved of or encouraged videogame piracy," it says.
"We have not published any encryption or signing keys. We have not published any Sony code, or code derived from Sony's code."
The group has said in the past that it is vehemently against games piracy and that it had worked on the hack so that users could install other operating systems and amateur software on the console.
Sony had indicated previously that it would try to fix the hack by updating the PS3's software over the internet.
Console hacking and online copyright infringement is a contentious topic, frequently ending in high-profile court cases as technology companies seek to prevent their systems from being copied or modified.While most cases in recent years have involved music and video file-sharing services like Napster, Grokster and Kazaa, a growing number of cases have involved the hacking of video games consoles.