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Online toy retailer eToys Inc. this week agreed to drop its lawsuit against the owners of the domain name etoy.com and will reportedly reimburse the owners up to $40,000 in legal fees.

eToys (ETYS) filed a trademark-infringement lawsuit against a group of Swiss artists in September over the domain etoy.com. In November, the Los Angeles Superior Court issued an preliminary injunction against the artists, forcing them to shut down the site pending the outcome of the lawsuit.

According to published reports, a settlement was reached on Tuesday, in which the group of artists can return to posting content on etoy.com. eToys will reimburse the group up to $40,000 in legal fees and other expenses incurred because of the suit and in return, etoy will drop its countersuit.

Many experts agreed the case was on shaky ground from the beginning because etoy.com was registered in 1995, two years before eToys.com registered its domain name. eToys could not be reached for comment, but a spokesman told the New York Times on Tuesday that the company will work to coexist with etoy.

Supporters of etoy.com saw the case in "David vs. Goliath" terms, with the giant corporation fighting to quash the independent group of artists.