Lawyers for Kate and Gerry McCann argued that 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 that the McCanns were involved in their daughter Madeleine’s disappearance.
In a judgment published on Tuesday, the European Court of Human Rights found that the couple’s reputation had been damaged by the fact that they were made official suspects in the case for a short time, rather than Mr Amaral’s comments.
The ECHR 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 that the claims did not appear to have impacted on the McCann’s “social relations” or their campaign to find their daughter.
It said: “While the Court understood that the book’s publication had undeniably caused anger, anguish and distress to the applicants, it did not appear that the book, or the broadcasting of the documentary, had had a serious impact on the applicants’ social relations or on their legitimate and ongoing attempts to find their daughter.”
The court also said that 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 now have three months to 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.
In May the McCanns said it was essential they find out the truth as they marked the 15th anniversary of their daughter’s disappearance.