The court in Nanterre, near Paris, dismissed the case on the grounds that a state taking legal action against journalists was contrary to the principle of press freedom.
It confirmed the public prosecutor's argument that "a sovereign state is the opposite of an individual".
Report of Hollande visit
The case against public broadcaster France Télévisions and two of its journalists, presenter Elyse Lucet and reporter Laurent Richard, arose from a report of former president François Hollande's visit to the country in 2015.
Lucet introduced the programme, which claimed that French diplomacy was placing business interests ahead of human rights, by describing Azerbaijan as "a dictatorship, one of the most savage in the world".
On France Info radio the same day Richard called its President Ilham Aliyev a "dictator" and a "despot".
In court Lucet insisted that her team at the Cash Investigation broadcast had spent a year preparing the programme.
"Saying that Azerbaijan is a dictatorship is not an opinion," she said. "Cash Investigation is not a programme of opinion but of investigation."
The defence summoned rights activists who had been jailed as witnesses and cited the Reporters Without Borders campaign, which claims that press freedom has been continuously eroded over the past four or five years in a country which it places 162nd out of 180 on its press-freedom ranking.
French friends of Azerbaijan
But Azerbaijan is not without sympathisers in France.
Arguing that the country is a beacon of religious tolerance, its lawyers summoned right-wing former MP Jean-François Mancel and André Villiers, an MP for the centre-right UDI.
Both are members of the French Friends of Azerbaijan organisation, sometimes described as an instrument of Baku's "caviar diplomacy", and frequent visitors to the Caucasus state.
The merits or faults of Aliyev's regime were not decisive to the ruling, however.
"Imagine North Korea filing 47 legal complaints against journalists," Lucet said in court and it was the question of freedom of expression that won the day.
The same was true in May when another court threw out a case brought by Baku against French MP François Rochebloine, who had called it a "terrorist state" because of its policy towards the Armenian enclave of Nagorny Karabakh.
Richard welcomed Tuesday's decision as a "strong message to Azerbaijan, and behind it every foreign country, that it cannot export censorship beyond its own borders".
Azerbaijan's lawyers say they will appeal.
Villiers, for one, is ready to testify again.
"This decision is no surprise," he told his local paper, l'Yonne Républicaine. "But I still say that calling Azerbaijan a savage dictatorship is inappropriate", criticising "double standards" that turn a blind eye to "excesses in countries like Egypt, Turkey, Saudi Arabia and Spain".