They haven't hit EnterpriseDB who have been doing the same thing, except not open source, since forever.

To my knowledge IBM's DB2 too has an "Oracle compatibility" switch that makes it also support PL/SQL.

Exactly. db2set DB2_COMPATIBILITY_VECTOR=ORA gives you Oracle compatibility. You can even get MySQL compatibility and I have actually used that once in the past.

A Korean company Tmax sells Tibero, the Oracle-compatible DBMS (proprietary). AFAIK, it's quite so much "compatible" (it even has same typos with Oracle DB), and they're not sued by Oracle.

Were they going to wipe out the SQL/PSM standard that has been approved by ISO?

"SQL/PSM is derived, seemingly directly, from Oracle's PL/SQL. Oracle developed PL/SQL and released it in 1991, basing the language on the US Department of Defense's Ada programming language."

https://en.m.wikipedia.org/wiki/SQL/PSM

They can always wipe out the Ada programming language while they're at it.

How can Oracle do it when they couldn't do it for the Java API?

As a fact, There are 2 ways to “win” a legal Fight, one is to get the desired judgment the other is to make fighting the case prohibitively expensive for the other party

I thought they "half-won" that case.