Mr de Villepin's victory sets the perfect stage for his planned political comeback
By Emma Jane Kirby
BBC News, Paris
The case was so complicated and tortuous that the judgement was 326 pages long and took more than an hour to read out. But for Dominique de Villepin, the result was plain and simple - a complete acquittal.
"My innocence has been recognised," he said, smiling as he left the court. "I pay tribute to the courage of the court which had allowed justice and law to triumph over politics."
Mr de Villepin was cleared on all four counts in the case, in which he was accused of trying to manipulate a judicial corruption investigation in a bid to spoil Mr Sarkozy's chances of winning the 2007 election.
Triumphant outside the Palais de Justice on Thursday, Mr de Villepin told reporters that although he had been "hurt" by the whole affair, it was time to move on.
"Let's turn the page," he said magnanimously, "and focus on serving France."
'Hang from a butcher's hook'
A couple of kilometres away in the Elysee Palace, President Sarkozy must be groaning. Thursday is the French leader's 55th birthday and this is not the kind of surprise he would have been hoping for.
THE CLEARSTREAM VERDICTS
Dominique de Villepin: Former PM, 55. Acquitted on charges of complicity in slander and forgery
Jean-Louis Gergorin: Former EADS vice-president, 63. Sentenced to 15 months in jail and a fine of 40,000 euros (£34,500; $56,000) for slander and use of false documents. Admitted leaking the fake list to investigators
Imad Lahoud: Computer expert, 42. Sentenced to 18 months in prison and fined 40,000 euros for slander and use of false documents. Confessed to adding Sarkozy's name to the list
Florian Bourges: Accountant, 31. Guilty of theft and breach of trust for obtaining the original Clearstream documents. Given a four-month suspended sentence.
Denis Robert: Journalist and author who broke the story, 41. Acquitted of dealing in stolen property and breach of trust
He had always promised that those responsible for smearing his name would "hang from a butcher's hook" - and although three men were convicted in the case, Mr de Villepin, the man he accused of being the "primary instigator" in the affair, has walked away a free man.
The French leader must be all too aware that the tables have turned.
Mr de Villepin's victory sets the perfect stage for his planned political comeback - the man who for the past five years has been suspected of maliciously smearing his rival's name has now himself become the innocent victim.
And even if he claims to "bear no grudges", his supporters will certainly do their utmost to make sure that Mr Sarkozy, the original wronged man, will quickly be recast as a paranoid, petty and power-hungry president with a personal vendetta against an old colleague.
With so much pride at stake, France's president may be reluctant "turn the page", but he knows he has to - France simply would not have the stomach to go through another such trial again, and the Elysee Palace has issued a statement saying he will not appeal against the court's decision.
With regional elections in March and with the next presidential election less than two-and-a-half years away, the focus now has to be - as Dominique de Villepin said so smoothly on Thursday - "on France".
The former prime minister has already promised to offer his country a "political alternative" to Nicolas Sarkozy, and with his rival's approval ratings running so low at the moment, he could be setting his sights on the 2012 presidential elections.
Now that his name is cleared, and he is free to voice his opinions, Dominique de Villepin has the potential to be a big nuisance factor to the Elysee in the run up to the vote.
"He becomes a serious opponent to Nicolas Sarkozy inside the actual majority," says Laurent Joffrin, editor of the left-leaning Liberation newspaper.
"He is the social right-wing opponent to Sarkozy and he can play a part in the next presidential election
His support is narrow - it is evaluated at around 8% which is not very much.
"In a presidential election each vote counts and if Sarkozy has an opponent in his own majority this can ease the pressure on the left."