The court overturned a decision of the European Commission that had given protection to Feta as an exclusively Greek product. Other countries that made the cheese, such as Denmark, Germany and France, had been prevented from marketing it under that name.
The Luxemburg court ruled that the Brussels Commission had unjustly prevented other member states from calling their own produce "Feta".
The court said that although some product names that made geographical reference were protected by European Union law as "designations of origin", Feta was a long-established generic term that could no longer be claimed solely by its place of birth.
Europe has already withdrawn from special protection the names of a range of national and regional specialities. Cheddar cheese made outside the West Country may now be sold as "Cheddar", and "Eccles" cakes may now come from outside Greater Manchester.
But the names of other products, including Cornish clotted cream and Stilton cheese, have been given "geographic protection".
Greece has long argued that Feta cheeses made elsewhere in Europe are foreign impostors and pale imitations of the real thing.
The name comes from the Greek word for "pieces" - fetes. According to the traditional method of manufacture, blocks of sheep's-milk cheese are cut into pieces, salted in brine, placed in wooden barrels, metal containers or skin bags, and left in a cool place to ripen.
In 1996, at the request of Greece, the Commission conducted a Europe- wide survey on the manufacture and consumption of Feta cheese, and consulted a scientific committee on names of origin.
The Commission concluded that "Feta" had not become the common name of a product and that it "continues to evoke a Greek origin". The cheese was placed on a register of names known as "protected designation of origin".
Cheese makers in Denmark, Germany and France, forced to label their produce "white cheese", challenged the decision, arguing that their cheeses had been marketed as Feta since 1963, 1981 and 1985 respectively.
The judges yesterday agreed, saying that the Commission had "unjustly, minimised the importance to be attached to the situation".
They said: "To decide whether a name has become generic, the situation existing in the member state in which the name originates, and in areas of consumption, together with relevant national or community legislation, must all be taken into account.
"The Commission should, in particular, have taken account of the existence of products legally on the market."
Products that can be made outside their place of origin:
Edam and Gouda
Products that have been given geographic protection:
Jersey Royal potatoes
Newcastle Brown Ale
Provence lavender oil
Italian Parma ham