The 2nd U.S. Circuit Court of Appeals in Manhattan upheld last year's ruling by a Connecticut federal court, which dismissed Dongguk's claims.
The Seoul-based university filed a lawsuit against Yale in 2008, saying its reputation was damaged due to Yale's negligence in confirming Shin Jeong-ah's degree.
Shin was found to have falsified a Yale degree to teach at Dongguk. The revelations came amid a shocking scandal alleging Shin's rapid rise in the academic and social fields was spurred by an apparent love affair with a top South Korean presidential aide.
In 2008, Dongguk launched the damage suit against Yale, saying Dongguk employed Shin as an art history professor based on the false information provided by Yale that she received a doctorate at the university.
The Connecticut court dismissed Dongguk's claims, citing lack of evidence to prove malice on the part of Yale. Dongguk immediately appealed.
But the appeals court also turned down Dongguk's claims.