Viva Erotica was given the restrictive rating by the Classification Review Board in 2006. That rating was challenged by AdultShop, which has stores in Australia and New Zealand.
AdultShop argued that the rating should be repealed because community standards have changed since the guidelines for movie ratings were formulated in 1984, and that the majority of Australian adults do not find explicit movies offensive, according to an ACNielsen survey conducted in September 2006.
In November 2007, Federal Court of Australia Judge Peter Jacobson upheld the Classification Review Board's ruling. On Wednesday, the full bench of the court dismissed AdultShop's appeal against Jacobson's judgment.
Malcolm Day, managing director of AdultShop, told the Herald Sun newspaper that the Office of Film and Literature Classification should commission new research into community views and update the guidelines.
He said governments were imposing their own "puritan" views on all Australians.
"The guidelines are simply a reflection of the conservative, subjective views of the (state and federal) attorney generals," Day said.
AdultShop is considering an appeal to the High Court.