The verdict, announced today, is the latest in a wave of patent lawsuits by technology firms fighting over market share.
The regional court in Mannheim ruled that Motorola Mobility, part of Google, did not infringe a Microsoft patent which enables applications to work on different handsets.
This allows application developers to avoid writing separate codes for each handset saving time and development costs.
Germany has become a major battleground in the global patent war between makers of mobile phones, tablet computer devices and their operating software because court actions there have proved relatively cheap and quicker than in other jurisdictions.
Microsoft has won three patent cases against Motorola in Germany. As a result of these rulings, smartphones with the disputed technology are no longer available on the German market.
"This decision does not impact multiple injunctions Microsoft has already been awarded and has enforced against Motorola products in Germany," said David Howard, associate general counsel at Microsoft.
Google bought lossmaking Motorola Mobility for $12.5 billion last year, in its largest acquisition ever, aiming to use the company's patents to fend off legal challenges against its Android mobile platform and expand beyond its software business.
Other technology companies have also invested billions of dollars in buying up patent portfolios that they can use against rivals.
Motorola could not immediately be reached for comment.
