The case centred on a complaint by an unnamed entrepreneur who found that when he typed his name into the search box of the site www.Google.De, the auto-complete function suggested results with the added words "Scientology" and "fraud".
The Federal Court of Justice said in a statement that the search engine must now remove defamatory word combinations when it is made aware of a complaint, although the company has no obligation to carry out checks in advance.
The federal judges overturned an earlier ruling by the higher regional court of Cologne.
The case revolved around a complaint by an unnamed food supplements company and its founder identified only as R.S., who argued his personal rights and his company's reputation were affected.
"In not a single search result is a link between the plaintiff and "Scientology" and/or "fraud" apparent," the statement added. The words automatically thrown up were in German.
She has reportedly filed a lawsuit against Google to stop the search engine automatically throwing up words or phrases such as "escort" or "red light past" when her name is typed in.
Google has argued in the past that it does not put forward the words itself that automatically pop up for searches and that the terms come from the frequency of users' search terms.
Google integrated the auto-complete function into its search engine in 2009.
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