The network launched the suit earlier this year, claiming that The Glass House's producers had violated confidentially agreements from their time working on CBS's show Big Brother.
According to CBS, the Glass House format copied the Big Brother format too closely.
Last month, a judge dismissed the network's request to have the show blocked, stating that the unscripted nature of The Glass House made it different from Big Brother.
The Hollywood Reporter has revealed that the case will continue in arbitration, but not in federal court.
Since its premiere earlier this summer, The Glass House has struggled to gain viewers.
In a statement released on Friday (August 17), CBS wrote: "The viewers have spoken and delivered the ultimate form of justice against The Glass House."