The Carnahan campaign and Fox News issued a joint statement on Friday announcing the settlement, which the Associated Press reports included no financial provisions.
A court filing states that that both parties "hereby stipulate to the dismissal of the above-captioned case, with prejudice, with each party to bear its own attorney's fees and costs."
Fox and host Chris Wallace first sued back in September because they said that the commercial implied that the network endorsed the Democrat. Observers called the Fox News suit a dramatic step in the war over fair use.
On Jan. 28 a judge ruled against FOX's request for an extension to mid August, saying that "The facts in this case appear relatively simple, and resolution of Defendant's Motion for Summary judgment depends largely on purely legal questions. Plaintiffs have not demonstrated good cause for granting their requested extension, and the Court does not wish litigation of this matter to be unnecessarily delayed."
Fox had been seeking to examine all of Carnahan's media activities including the activity of her media consultant Shorr Johnson Magnus. On Jan. 13, Carnahan filed a protective order to not allow Fox to see Magnus's confidential documents.
Additional reporting by Alex Sciuto.
[Late Update: The Carnahand campaign passes along this statement:
"The Carnahan campaign's objective regarding this lawsuit has always been to get it dismissed and that has now occurred. The campaign fully supports compliance with the law."
"The campaign acknowledged that the ad went beyond what Fox permitted, but it continues to believe it fit within the laws governing fair use as it was only a short clip in the context of a political campaign and not a commercial use. And we all know the 1st Amendment protects political speech. The campaign didn't pay Fox or Chris Wallace a dime, but it just wasn't practical to keep trying to fight the deep pockets of Fox and it's band of corporate lawyers."