The case between Google and the US Author's Guild disputing the scanning and uploading of millions of books has been dismissed following an eight year legal battle.
Authors had accused the search engine giant of copying their work to its online library without permission. Google claimed that as it was only uploading excerpts of texts, this constituted "fair use" and did not amount to copyright infringement.
US Circuit Judge Denny Chin accepted Google's argument and dismissed the case, adding that the project provided "significant public benefits".
Chin wrote in his dismissal decision that Google's digitisation of books gave "respectful consideration" to the rights of authors, while at the same time improving the availability of books to students, teachers, researchers and members of the public.
The project was described by Chin as "transformative", and he even suggested that it could help increase book sales. "In my view, Google Books provide significant public benefits, indeed, all society benefits," Chin wrote.
Over 20 million books have been added to Google's digital library since its inception in 2004. Had the Author's Guild been successful, Google would have been expected to pay upwards of $3 billion (£1.87 billion).
James Grimmelmann, a University of Maryland intellectual property law professor familiar with the case, told Reuters: "This is a big win for Google, and it blesses other search results that Google displays, such as news or images.
"It is also a good ruling for libraries and researchers, because the opinion recognizes the public benefit of making books available."
The case was only given class action status last year, following seven years of legal wrangling. The Author's Guild are expected to appeal.