TUV Rheinland, which awarded EU safety certificates to the French implant manufacturer, "neglected its duties of vigilance", the court said.
PIP (Poly Implant Prothese) was shut down in March 2010 amidst a worldwide health scare.
The company used sub-standard silicone gel, causing many implants to rupture.
Q&A: Breast implants health scare
Six implant distributors and 1,700 women had sued TUV Rheinland for 50m euros (Â£42m), arguing anything but a cursory inspection would have found problems.
The plaintiffs in the civil case will be given an initial payment of 3,000 euros per victim for surgery to have the implants removed.
Jan Spivey, a British woman who received PIP implants as part of reconstructive surgery following breast cancer in 2002, said she was "delighted" with the ruling.
"Of course TUV has some responsibility and should be held to account. They're the organisation that gives the CE certification for safety, and that was what my surgeon relied on when he gave the implants to me.
"Anybody that gives safety certification for a product that is going to make women very sick does have responsibility," she told the BBC's Newshour programme.
It could open the door to many more compensation claims, says the BBC's Christian Fraser in Paris.
TUV Rheinland had won two previous cases in Germany. This was the first such case in France.
The German firm has said it will appeal against the verdict.
TUV Rheinland awarded PIP - formerly one of the world's leading suppliers of implants - its European safety certificate for 17 years.
The founder of PIP, Jean Claude Mas, is still on trial for aggravated fraud in Marseilles, along with four of his executives.
He revealed during police interviews that he had ordered employees to hide the unauthorised silicone when inspectors visited his factory.
It has since emerged the substandard gel was used in 75% of the implants.
The court heard an employee in charge of quality control had only a cooking diploma - another in charge of the lab had previously trained as a pastry chef, our correspondent says.
A ruling is expected in Jean Claude Mas' case on 10 December.

Bridgewater Community Healthcare (BCH) said it had "made a lot of progress" since an inspection last summer.
But Labour MP Rosie Cooper said it was "staggering" that BCH was due to take over most of Liverpool's community health services from July.
The Department of Health is yet to respond.
The Care Quality Commission (CQC) conducted its first full inspection at BCH - which is used by about 1.5m people in north-west England annually - in May and June 2016.
It said it measured 40 domains across the services with one rated as outstanding, 27 as good and 12 as requiring improvement.
Overall, the trust received a rating of "requires improvement".
Ms Cooper, MP for West Lancashire, said she called on the CQC in July to publish its inspection report ahead of any decision on "awarding the multimillion-pound contract for Liverpool community health services".
She said: "What this report tells us is Bridgewater Community Healthcare needs to improve the services they have currently got."
Last November, BCH was chosen to run most of the city's community health services by NHS England and Liverpool Clinical Commissioning Group (CCG).
Ms Cooper said that the inspection rating "raises some very serious questions about the entire transaction process in Liverpool".
"I have called on the Secretary of State to review this sorry state of affairs and intervene to uphold NHS rules," she added.
Colin Scales, chief executive at BCH, said: "All the essential actions the CQC has asked us look at have already been addressed since the inspectors were on site, so we've made a lot of progress and are in a stronger position now as we move forward."
Katherine Sheerin, chief officer for NHS Liverpool CCG, said: "Bridgewater NHS Foundation Trust was identified as the preferred provider of community services in Liverpool because we believe it is the best organisation to help accelerate our Healthy Liverpool plans for making more care available in the community so that people do not end up in hospital."
She added the CCG was "confident the Trust is already taking action to address the issues which have been identified".
A French court has ordered a German company to pay compensation to hundreds of women who were fitted with defective breast implants.
[NEXT_CONCEPT]
An MP has called on the government to review a decision allowing an NHS trust that "requires improvement" to run community health services in Liverpool.