The International Trade Commission said yesterday that technology used in Xbox 360 doesn't violate a patent owned by Google subsidiary Motorola Mobility.
Had the ruling gone the other way, the ITC could have blocked the console from being imported into the United States, Reuters reports.
The legal fight dates back to 2010, when Motorola accused Microsoft of infringing five patents, four of which were subsequently dropped from the case. The last patent in question allows devices to communicate wirelessly over short distances.
Microsoft deputy general counsel David Howard said: "This is a win for Xbox customers and confirms our view that Google had no grounds to block our products."
A Motorola spokesperson said the firm was "disappointed" with the decision and is evaluating its options, although the ITC has now effectively terminated the case.
On Tuesday, Microsoft announced its next console, Xbox One. The system will launch in 2013, but Microsoft Game Studios executive Phil Spencer has pledged to support Xbox 360 for "years to come". He has also teased a "huge" Xbox 360 announcement at E3 next month.