Transport for London (TfL) had asked the court to rule on whether the online taxi booking service's app acted as a taximeter. Only black cab drivers who have received training to learn London's streets are allowed to use taximeters.
Uber allows people to book and pay for a ride-share, taxi or private driver through a mobile app. The mobile app forwards GPS data to a server that calculates the fare.
Lord Justice Ouseley today ruled that Uber’s mobile service does not constitute a taximeter.
“A taximeter … does not include a device that receives GPS signals in the course of a journey, and forwards GPS data to a server located outside of the vehicle, which server calculates a fare that is partially or wholly determined by reference to distance travelled and time taken and sends the fare information back to the device,” he said.
RfL said it welcomed legal clarity on the issue, and launched a public consultation on potential changes to private hire regulations.
"TfL's view has always been that smartphones are not taximeters. However, it recognised the validity of arguments to the contrary and the significant public interest in establishing legal certainty in the matter," it said.
"With the legal position now clarified, TfL will continue to work with a wide range of stakeholders to deliver safe, modern and innovative taxi and private hire services to the benefit of customers," it said.
Leon Daniels, TfL's managing director of surface transport, said: "Disruptive technology and new business models have radically changed the way that taxi and private hire services operate and has widened customer choice. This is welcome. At the same time, as the regulator, we must ensure that regulatory requirements are met and are developed in a way that delivers the high standards customers deserve."
"As part of this, we are gauging public opinion on a range of potential changes to private hire regulations, including stricter rules on insurance and English language skills."
The consultation will close on 23 December.
Uber has established itself in many major cities around the world as a rival to traditional taxi companies. It works with "driver partners" who have control over how often they pick up and drop off Uber users. The company follows a 'surge pricing' model which adjusts the fare passengers are presented with depending on the demand for services and supply of cars available to meet that demand.