the out-of-court settlement comes a day before the pair were scheduled to begin lawsuit proceedings in Manhattan Federal Court.
"The case has been settled in principle," said Jay-Z's attorney Peter Raymond. "We have agreed on the outlines of a settlement and need to reduce it to writing."
Ortiz has been trying to settle as far as back as June 2010, a few months after Jay's team initially sued Ortiz over the use of his 40/40 Club trademark at his own 40/40 establishment in the Dominican Republic.
Ortiz, who plays for the Boston Red Sox, previously admitted to biting Jay's club concept after visiting his flagship Manhattan location, and then took it to his home country in an attempt to duplicate its successes and branding.
He admitted wrong-doing, but wished to settle for a smaller amount without going to trial.
Judge Richard Berman also reportedly urged both parties to agree to a settlement over a trial, which could have easily turned into a media frenzy.
"Sounds like a sensible outcome," he wrote in a memo filed in Manhattan District Court.
Terms of the settlement are currently unknown. However, the suit was seeking $5 million in damages and that Ortiz forfeit the use of the name.
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