Judge Kent Dawson said there wasn't enough evidence to show the planned 3-D image would violate patents held by Hologram USA Inc. and Musion Das Hologram Ltd.
The companies own rights to technology known for digitally resurrecting deceased rapper Tupac Shakur at the 2012 Coachella music festival.
"The court's decision is not surprising," attorney Howard Weitzman, who represented Jackson's estate and dick clark productions, wrote in an email. "The request to stop this extraordinary Michael Jackson event was ludicrous."
Plans to use the hologram during the show Sunday emerged with the lawsuit, but they weren't confirmed until the hearing Friday afternoon. Show producers had been promoting only a "history-making performance" at Las Vegas' MGM Grand Garden Arena that would promote the singer's latest posthumous album, "Xscape."
Hologram USA and Musion said in their emergency lawsuit Thursday that one of their products was being used without authorization by a competitor to create a segment that depicts Jackson performing a new song, "Slave to the Rhythm."
Dawson noted that the lawsuit didn't provide evidence that the company's patents were being used to create the Jackson hologram, and attorneys for the defendants said the techniques being used were in the public domain. Technology and visual tricks that can create holographic-type images have existed for decades, although the Shakur performance sparked more interest in creating realistic performances of dead celebrities.
Attorney Michael Feder, representing the show and Jackson estate, filed a response Friday, saying the holographic performance had been planned for months and was discussed with Alki David, who owns the rights to the technology that creates and projects lifelike images to appear alongside live performers through Hologram USA and Musion.
Plaintiff's attorney Ryan G. Baker said his clients were disappointed with the ruling, but the lawsuit will continue.
"It's only the very beginning of a case that will continue to be prosecuted by my clients, and ultimately they are confident that they will prevail and will recover all available damages for the defendants' infringing conduct," Baker said.
Hologram USA obtained the rights to the patents after the bankruptcy of Florida effects house Digital Domain, which created the Shakur image to wide acclaim two years ago.
The lawsuit also named John C. Textor, the chairman of Florida-based Pulse Entertainment Corp. who was the former head of Digital Domain. Pulse is accused of using the hologram techniques without a proper license. Textor said he could not comment publicly on the case.
The lawsuit names Atlanta-based Pulse Entertainment Inc. as a defendant. Spokesman Ken S. Johnson said the company was listed incorrectly because it had no connection the Billboard Music Awards.
In March, Hologram USA sued Cirque du Soleil and MGM Resorts International over its show, "Michael Jackson ONE" at Mandalay Bay Hotel & Casino. The show features a performance by a digital rendition of Jackson, which the company also contends is an unlicensed use of its technology.
The case is being handled in a Los Angeles federal court. Cirque du Soleil and MGM Resorts have been granted an extension until May 23 to respond to the lawsuit.