The Paris High Court dismissed the complaint in its entirety, which Universal Music France brought after Deezer continued to allow its subscribers to listen -- but not download -- songs following their contract dispute.
In 2008, Deezer concluded a deal under which it paid Universal Music France for use of its catalogue, but in May 2011 it refused new conditions including limiting its free offer to listening to five consecutive songs.
Deezer chief Axel Dauchez told AFP he was "particularly happy that the judge found that the new conditions imposed by Universal did not conform to the charter of 13 commitments" agreed by music companies and online music providers in January 2011 under the support of the government to develop legal music offerings on the internet.
In June, Deezer restricted its free service to five hours per month at the insistence of music companies. It said the change led to it losing many free users but a five-fold increase in paying customers.
The company currently has 100,000 direct subscribers, plus another 1.3 million that subscribe via their smartphone subscription.
Universal Music France said it planned to appeal.