Apple had previously applied to register 'App Store' as a trademark, a move that Microsoft formally opposed on the grounds it was too generic.
Earlier this year, US District Judge Phyllis Hamilton granted Amazon's motion for partial summary judgment regarding the false advertising allegations, and even then things weren't looking too promising for Apple on the trademark front.
Apple has provided Amazon with a covenant that it will not sue over the latter's use of the term, so the trial scheduled for August will not go ahead.
Ars Technica quoted Apple spokesperson Kristin Huguet as saying "We no longer see a need to pursue our case.
"With more than 900,000 apps and 50 billion downloads, customers know where they can purchase their favourite apps."
We'll forgive any Amazon executive for thinking 'Apple folded.'
In May, Amazon expanded its Appstore to cover almost 200 countries.