(08-14) 18:29 PDT SAN FRANCISCO -- Conservative talk show host Michael Savage has changed his mind and is reluctantly dropping his lawsuit against an Islamic rights group that launched an advertisers' boycott after he attacked Islam and the Quran on the air, his lawyer said Thursday.

A San Francisco federal judge threw out Savage's earlier copyright and racketeering suit against the Council on American-Islamic Relations last month but gave him a chance to file an amended suit by today. In an unusual court filing, attorney Daniel Horowitz, who had earlier promised a new suit that would pass legal muster, said Thursday that Savage has a legitimate case but has decided not to pursue it.

Insisting that Savage can prove the Islamic organization engaged in a conspiracy that harmed him financially, Horowitz said the talk show host is reluctantly dismissing the suit because of "factors arising out of this litigation," which he did not specify.

Later Thursday, Horowitz said he feared his client would be in danger if he continued the case. The attorney said he has no evidence that CAIR commits violent acts but alleged that the Islamic group is out to silence Savage and conducts campaigns that may stir up violence by others.

Ibrahim Hooper, spokesman for CAIR, said Savage was "cutting his losses" by dropping the suit.

"They realized they had no case whatsoever but wanted to get one more smear in before they headed for the bushes," Hooper said.

Savage, who has about 8 million listeners a week on 400 stations for his syndicated "Savage Nation" talk-radio program, said in a broadcast last Oct. 29 that Muslims were "screaming for the blood of Christians or Jews or anyone they hate." He called the Quran a "hateful little book" and a "document of slavery."

CAIR, based in Washington, D.C., posted four minutes of excerpts from the broadcast on its Web site and called for an advertiser boycott. The group says Savage has since lost $1 million in advertising.

Savage's lawsuit, filed in September, accused CAIR of copyright infringement, saying the group had misappropriated his words and used them for fund-raising. He also claimed the group was engaged in racketeering, describing it as a "mouthpiece of international terror" that had helped to finance the terrorist attacks of Sept. 11, 2001. CAIR called those allegations preposterous and denied any connection to terrorism.

In a July 25 ruling, U.S. District Judge Susan Illston said anyone who listens to a public broadcast is entitled to take excerpts and use them for purposes of comment and criticism without violating copyright.

In dismissing the racketeering claim, Illston said that even if Savage could prove CAIR was part of a worldwide terrorist conspiracy, he hadn't shown how it affected him or his broadcast. She noted that his allegations were largely focused on activities - such as lawsuits, boycotts and criticism of his broadcasts - that are protected by free speech, but said he could try to rewrite the claim to cure its legal defects.

E-mail Bob Egelko at begelko@sfchronicle.com.