Lawyers for Kate and Gerry McCann argued Portuguese authorities had breached their right to respect for a private and family life in the way the courts there dealt with their libel claims against Goncalo Amaral.
He claimed in a book, TV documentary and newspaper interview the McCanns were involved in their daughter Madeleine’s disappearance.
In a judgment published on Tuesday, the European Court of Human Rights (ECHR) found the couple’s reputation had been damaged by the fact they were made official suspects in the case for a short time, rather than Mr Amaral’s comments.
The McCanns said in a statement issued through their lawyers they were “naturally disappointed” with the court’s decision.
“We took action for one and only one reason: Mr Amaral’s unfounded claims were having a detrimental impact on the search for Madeleine," they said.
“If the public believed that we were involved in her disappearance, then people would not be alert for possible clues and may not report relevant information to the relevant law enforcement agencies.
“The focus is now rightly on the search for Madeleine and her abductor(s).
“We are grateful for the ongoing work by the British, German and Portuguese police.
“We hope that, with the help of the public, hard work and diligence we can eventually find those responsible for Madeleine’s disappearance and bring them to justice.”
The ECHR had said: “The court considered that, even assuming that the applicants’ reputation had been damaged, this was not on account of the argument put forward by the book’s author, but rather as a result of the suspicions expressed against them, which had led to their being placed under investigation in the course of the criminal investigation (the prosecutor’s office decided to take no further action in July 2008) and had led to intense media attention and much controversy.
“The information had thus been brought to the public’s attention in some detail even before the investigation file was made available to the media and the book in question was published.
“It followed that the national authorities had not failed in their positive obligation to protect the applicants’ right to respect for their private life.”
The applicants’ complaint concerning their “right to be presumed innocent” was also rejected, because Mr Amaral’s book was published three days after the decision to take no action against them.
The ECHR also found the claims did not appear to have impacted on the McCann’s “social relations” or their campaign to find their daughter.
The court said the McCann’s right to respect for their private and family life had to be balanced against Mr Amaral’s freedom of expression.
The McCanns will not appeal against the decision.
Their three-year-old daughter vanished during a family holiday to Praia da Luz, Portugal on May 3, 2007.
Earlier this year German investigators found new evidence against the prime suspect in her disappearance, a prosecutor revealed in an interview on Portuguese television.
Convicted sex offender Christian Brueckner was declared a suspect in the case by Portuguese officials in April as a 15-year legal deadline approached, and he has been under investigation by German officials for two years.