A Palestinian grocer portrayed as a terrorist in the film Bruno has settled his slander suit against Sacha Baron Cohen and David Letterman, his lawyer has revealed.

Ayman Abu Aita's "case is settled to the mutual satisfaction" of everyone involved, attorney Joseph Peter Drennan said. Court records show the case was designated settled and closed on Wednesday.

In the 2009 comedy, Baron Cohen plays an Austrian fashion journalist aiming to make peace in the Middle East. He interviews Abu Aita, who is labelled in a caption as a member of the militant Al-Aqsa Martyrs' Brigade.

Baron Cohen discussed Bruno's encounter with a "terrorist" on Letterman's show on CBS.

A Christian and "a peace-loving person" who was living in the West Bank, Abu Aita has never associated with the Al-Aqsa Martyrs' Brigade or any terrorist activity, his court papers said.

He went to the interview that appeared in Bruno thinking he was talking to a journalist about peace activism, his court complaint said. Instead, the movie spurred death threats against him, damaged his business and made him fear for his family's safety, the complaint said.

The suit sought millions of dollars in damages.

Baron Cohen's lawyers and Letterman's attorneys have said in court filings that free speech rights protected the statements about Abu Aita in Bruno and the Late Show interview.

Abu Aita's "name or likeness was used in a newsworthy context in a documentary-style movie that conveys matters of legitimate public interest," Baron Cohen's lawyers said in papers filed last year.

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