NEW YORK (Reuters) - Barnes & Noble Inc <BKS.N> has settled a lawsuit brought against it by Spring Design, which had accused the top U.S. bookseller of illegally copying a screen design for its popular Nook electronic book reader.

Under terms of the agreement, Spring is granting Barnes & Noble a non-exclusive license for all of its patents and patent applications. Other terms of the settlement were not disclosed.

In its complaint, filed in November 2009, Spring Design said it had shared the dual-display design of its Alex eReader with Barnes & Noble when the companies held talks that year about a possible partnership.

The company said Barnes & Noble later incorporated features of Alex into Nook, breaching a nondisclosure agreement. One Nook screen is used for reading and one for browsing.

Barnes & Noble, which has faced shrinking booksales at its namesake bookstores for years, launched the first version of the Nook e-reader in 2009 to compete with Amazon.com Inc's <AMZN.O> market leader in the growing e-books market. Last week, Barnes & Noble claimed to have a 25 percent share of that market.

The case, which will be dismissed, is Spring Design Inc v. Barnesandnoble.com LLC, U.S. District Court, Northern District of California, No. 09-05185.

(Reporting by Phil Wahba, editing by Dave Zimmerman)