The European Union's highest court upheld the EU's principle of protected food names by saying that only cheeses labelled "Parmigiano Reggiano" – in other words, those made in Italy – should be sold as "Parmesan".
But it said responsibility for policing this did not lie with Germany, which had been taken to the European Court of Justice by the European Commission in Brussels.
Parmesan, a hard cheese that is grated onto pasta or eaten in slivers with balsamic vinegar in a salad, comes from the Parma region in northern Italy, where cheesemakers are fighting to protect their product from cheaper, lower-quality copies.
The Commission, the EU executive, argued that Germany should not have allowed non-Italian cheese to be labelled "Parmesan".
But Germany, Europe's second-largest producer of that type of cheese, said "Parmesan" had become a generic term over the centuries for grated hard cheese, and entirely unrelated to the specific Italian product from the Parma region.
The court said in a statement that an EU country was not obliged to take the initiative in penalising the infringement on its territory of protected origin names from another EU country.
"Responsibility for monitoring compliance with the specification for the PDO 'Parmigiano Reggiano' does not lie with the German inspection authorities."
The original Italian name, along with the cheese's specific geographical origin and manufacturing process, won legal protection as a PDO across the EU in 1996.
Both the Commission and Italian cheesemakers welcomed the verdict, saying its most important aspect was to confirm that only "Parmigiano Reggiano" could be sold as "Parmesan".
"The court has upheld the basis of our PDO system," Commission agriculture spokesman Michael Mann said. "Parmesan is not a generic product – you can only call it that if you follow the specifications of Parmigiano Reggiano."
Under the EU's system of protected names for farm products, of which there are hundreds, protection also extends across the 27-country block to translations of the registered term or name.