Morris, maker of Marlboro cigarettes, which had claimed the ban violates a free trade agreement linking non-EU member Norway to the European Union's market rules, said it might appeal.

"As the court sees it, the display ban is necessary and that there are no alternative, less intrusive measures that can have equivalent results," the court said.

Tord Dale, political advisor to the Norwegian Health Minister, said: "We are glad that the court has decided that looking after peoples health is more important than the profits of the tobacco industry."

Since 2010, cigarette packages and other tobacco products have been covered up in Norwegian shops and are not visible to buyers, as part of policies to discourage smoking.

In April, the UK implemented a similar ban for large vendors, while smaller vendors have until 2015 before having to conform to the legislation.

The decision to rebuff Philip Morris' complaint comes less than two months before the fifth round of negotiations on the World Health Organization's global tobacco treaty in Seoul, South Korea, in November.

"We are not happy with the ruling," said Phillip Morris spokesman Nordan Helland. "We will now look carefully at the court's decision and assess if we are going to appeal."

Norway has said that if the ban was to be upheld it would follow Australia and require plain packaging of tobacco.

"I know that this ruling will be read carefully in other European countries," said Knut-Inge Klepp, director at The Norwegian Health Directorate.

"Currently we are waiting for a new strategy from the government on tobacco legislation. We are in dialouge with other European countries on the issue," he added.

Australia's landmark decision means that from Dec. 1, cigarettes and tobacco products must be sold in plain olive green packets with graphic health warnings, such as pictures of mouth cancer and other smoking-related illnesses.