Nancy Stouffer had claimed Muggles was a word she'd thought up for mythical characters in her book The Legend of Rah and the Muggles in the 1980s.
And she said she wrote a colouring book called Larry Potter and His Best Friend Lilly.
But a New York court threw out all the claims. It said Stouffer had lied and changed evidence to make her claims stronger.
She was fined £30,000 and even had to pay some of the money it cost JK to defend herself.
JK's agent Christopher Little said: "Ms Rowling is thrilled."