The 27-year-old Canadian singer was sued over his song Pound Cake/Paris Morton Music 2 that includes a 35-second monologue recorded by Smith.
The liner notes for the song from Drake's third studio album Nothing Was The Same said the clip was properly licensed.
Pioneering musician: Jimmy Smith, shown performing in the UK with a Hammond organ in January 1964, was allegedly included in the Drake song Pound Cake/Paris Morton Music 2 without permission
The lawsuit listed Drake, Cash Money Records and others as defendants and was seeking more than $300,000 in damages.
Smith used the monologue in his 1982 song Jimmy Smith Rap.
The Drake track actually consists of two songs with Pound Cake featuring a guest appearance by Jay-Z.
The song also features a sample of the Ellie Goulding song Don't Say A Word as well as a sample of C.R.E.A.M. by Wu-Tang Clan.
Smith was a pioneering jazz musician whose instrumental jazz albums often made the Billboard charts.
He also helped make popular the Hammond B-3 electric organ that was employed in the 1960s and 1970s in R&B, reggae and rock songs.
Drake, whose given name is Aubrey Drake Graham, has been linked romantically recently to 26-year-old singing superstar Rihanna.
The Degrassi: The Next Generation actor earlier this month appeared on the Jimmy Kimmel show and donned a disguise to quiz folks on the street about himself.
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