The High Court ruling quashed Murphy’s 2006 conviction for using Greek channel Nova to show live football in her pub, the Red, White and Blue.
Lord Justice Stanley Burnton said: "She was wrongly prosecuted".
It verified the European Court of Justice ruling of 4 October 2011 which said that restricting the sale of European foreign satellite decoder cards is contrary to the freedom to provide services. The judge said he was not in a position to rule against copyright.
This concludes Murphy's six-year fight against the Premier League which began in 2006 when Murphy was ordered to pay almost £8,000 in fines and costs for broadcasting through Nova.
The issue of copyright has been left open following another High Court ruling earlier this month - Premier League vs QC Leisure (and others). Lord Justice Kitchin had said those importing foreign satellite equipment had breached the Premier League’s copyright in certain areas, such as by broadcasting the Premier League anthem.
Trade bodies have warned licensees not to purchase a European decoder card until a definitive ruling has been made on copyright.
A spokeswoman for Sky said: "The UK courts have already ruled that the unauthorised use of the Premier League's copyrighted material via foreign satellite systems in pubs is illegal. This remains the case following the ruling on Karen Murphy. We will continue to protect our legitimate customers by supporting action against licensees who break the law. At the same time, we will continue to work with the licensed trade to help even more pubs and clubs enjoy the business benefits of live sport."
A Premier League spokesman said: ”Following the news that Karen Murphy’s appeal to the High Court has seen her conviction overturned, the Premier League would like to make clear that this decision does not change the outcome of the QC Leisure foreign satellite case.
"In that judgment (QC Leisure), made on 3 February 2012, Lord Justice Kitchin was consistent with the ECJ ruling and made it clear that the law gives us the right to prevent the unauthorised use of our copyrights in pubs and clubs when they are communicated to the public without our authority.
"That unauthorised use gives rise to both civil and criminal penalties. Therefore should Mrs Murphy, or any other publican, use European Economic Area foreign satellite systems to show Premier League football on their premises without our authority and outside the scope of our authorisation, they make themselves liable for us to take action against them in both the civil and criminal courts."
The British Beer & Pub Association Brigid Simmonds, said: “I am really pleased in some respects, but this still leaves pubs in a state of uncertainly until the complex issues are solved about what can and can’t be shown. We mustn’t forget the key factor driving the issue, which is the huge price hikes levied on pubs by a monopoly provider. If we can tackle that, we could be on our way to solving this problem.
“What we need is a fairer approach to pubs from Sky, rather than price hikes year after year, which have been pushing many pubs to take their Sky services out, a point that we have made very strongly to both Ofcom and with the company itself.
“It’s a shame, as pubs have been facing huge pressures from other sources, not least huge tax rises on beer. Live sport is a key part of the pub for millions of customers, who have a brilliant summer of sport to look forward to in pubs.”