According to documents filed in U.S. District Court in New York, Hasbro dropped the lawsuit Friday.
Hasbro, which owns the North American rights to the word game, sued Jayant and Rajat Agarwalla, brothers from Calcutta, India, this summer. The brothers developed the unauthorized version, called Scrabulous, after they couldn't find an online version they liked.
The court documents did not specify a reason for the withdrawal of the case.
RJ Softwares, the Agarwalla brothers' company, said in a statement that it has agreed not to use the term "Scrabulous" and has made changes to different versions of the game it created after the lawsuit was filed.
Hasbro and the Agarwalla brothers did not immediately return messages left seeking comment on Monday. A lawyer for Hasbro declined to comment and referred questions to the Pawtucket, R.I.-based company.
Scrabulous was highly popular on Facebook and became one of the online networking site's most popular activities until it was removed this summer.
Hasbro had asked Facebook to block the program in the U.S. and Canada, something the site initially resisted despite risks of losing immunity protection from copyright lawsuits. The game eventually was taken down, prompting people to form groups with names like "Save Scrabulous," which had more than 49,000 members still in it on Monday.
In early July, video game maker Electronic Arts Inc. released an official Scrabble version for American and Canadian Facebook users under a licensing deal with Hasbro. The authorized online Scrabble attracted only a fraction of the half-million users of Scrabulous.
Hasbro sued the brothers after EA's release, accusing them of violating Hasbro's copyright and trademarks. The lawsuit sought to end Scrabulous and asked for unspecified damages.
In late August, Facebook said it was forced to disable Scrabulous after another one of Scrabble's rights owners, Mattel Inc., made a formal removal request and the developers of Scrabulous took no action themselves.
It was not immediately clear what the status of that lawsuit is. Representatives at Mattel did not immediately return messages left seeking comment.