The Federal Court of Justice in Karlsruhe, overturning two lower court rulings, said Google must block libelous words added to a name entered in the search field if informed about them, Bloomberg reported Tuesday.
The plaintiff in the case, the founder of a Web-based company selling nutritional supplements, complained the terms "Scientology" and "fraud" were offered as suggestions when his name was entered in the Google search field.
He has no affiliation with the religious group nor is he being investigated for fraud, the court confirmed in a statement.
"The search additions affect the plaintiff's privacy rights as they convey the statement that there is a relationship between the plaintiff and the negative words," the Karlsruhe court said.
"If that statement was untrue, the plaintiff's rights would be violated."
The Google autocomplete feature, introduced in April 2009, offers suggestions created by an algorithm that looks at how frequently the terms had been searched.
A Google spokesman in Germany said the company was disappointed and surprised at the ruling.
Kay Oberbeck said it was "incomprehensible" Google can be held liable for words entered by users.