Facebook and parody site Lamebook have settled their respective suits against each other, with Lamebook keeping its name and continuing operations.

When Lamebook – a site dedicated to making fun of things posted on Facebook – launched with a logo similar in style to the social networking site, Facebook sent cease and desist letters. Lamebook responded by filing a suit seeking a ruling that it did not infringe Facebook’s marks and was an obvious parody; Facebook retorted with its own suit alleging trademark infringement.

Facebook argued that Lamebook’s logo utilized white lowercase letters against a blue background in a nearly identical font, placed in similar spots on the site’s pages. Consumer confusion was enhanced by similar functionality on the sites, as Lamebook allows users to “like” posts and encourages users to post status updates and create profiles, according to Facebook’s complaint.

In its suit, Facebook sought trebled damages under the Lanham Act and the cancellation of Lamebook’s domain name registration.

But the parties quietly reached a settlement under which Lamebook agreed to drop its attempts to trademark its name and added a disclaimer to its site, which reads: “This is an unofficial parody and is not affiliated or associated with, or endorsed or approved by, Facebook.”

In a joint statement, the parties said they were “now satisfied that users are not likely to be confused.”

“We are pleased to arrive at an agreement that protects Facebook’s brand and trademark and allows for Lamebook’s continued operation,” the companies said in the statement.

To read the complaint in Facebook v. Lamebook, click here.

Why it matters: Despite the settlement, Facebook is still dealing with similar suits against site Teachbook, a site for teachers (Teachbook has filed a motion to dismiss that suit, brought in Illinois federal court) as well as porn sites FacebookOfSex.com and Faceporn.com.