Fox bosses filed the lawsuit at India's Bombay High Court in May (09), claiming officials at BR Films produced an illegal remake of the Oscar-winning 1992 film.
The legal papers stated that permission had been granted to make a picture based on the idea of the U.S. version - but rights for a Hindi-language remake had not been approved.
Fox claimed Banda Yeh Bindaas Hai, which translates as This Guy is Fearless, was almost identical to My Cousin Vinny's storyline.
BR bosses had denied the allegations, but both companies have "now succeeded in amicably resolving the case" in an out-of-court settlement.
It is the first time a Bollywood studio has been forced to pay out for borrowing ideas from Hollywood movies.