Both companies specialize in business software and in 2007 the Texas-based Versata sued SAP, saying that SAP's Business Suite products infringed upon its patents.
An SAP spokesman said the company denied the allegations and could potentially appeal the decision.
"SAP is reviewing the decision and is considering further steps," he said.
The software giant is also in the middle of a lengthy lawsuit with rival Oracle. That company has sued SAP for alleged industrial espionage and charges that the damage caused cost it up to one billion euros. That case is set to be heard by a San Francisco, California court next year.
The German stock market index, the DAX, dropped slightly at the news, but then bounced back in later trading.
Editor: Rick Demarest