In a new ruling, a judge says there are "substantial similarities" between Sheeran's Thinking Out Loud and Gaye's Let's Get It On.
Instead, District Judge Louis Stanton ruled that a jury should decide on whether parts of Let's Get It On, released in 1973, were copied in the singer's 2014 number one and Grammy-winning hit Thinking Out Loud.
In a decision which has now been made public, the judge said there were "substantial similarities between several of the two works' musical elements".
His defence team argues that Thinking Out Loud is characterised by "sombre, melancholic tones, addressing long-lasting romantic love", while Let's Get It On is a "sexual anthem".
Despite this, Judge Stanton said they could be viewed as having the same "aesthetic appeal".
However, in his ruling, the judge also said it was disputed whether the harmonic rhythm of Let's Get It On was deserving of copyright protection or whether it was too common.
The lawsuit has been brought against Sheeran, as well as co-writer Amy Padge, Sony/ATV Music Publishing and the Atlantic record label, by the estate and heirs of late producer Ed Townsend, who co-wrote Let's Get It On with Gaye.
The album X, which features Thinking Out Loud, has sold more than 15 million copies and was also nominated for a Grammy in 2015.
Judge Stanton is presiding over two lawsuits alleging Sheeran copied Let's Get It On. In the other case, Structured Asset Sales (SAS), which owns one-third of Townsend's estate, is suing for $100 million (£79 million).
In that claim, according to legal documents lodged in New York, Thinking Out Loud allegedly rips off the "melody, rhythms, harmonies, drums, bass line, backing chorus, tempo, syncopation and looping" of Gaye's song.
Sheeran has also been accused of plagiarism over his songs Photograph and Shape Of You, settling a £16 million lawsuit over Photograph last year.
In December, a California judge upheld a judgment ruling that Robin Thicke and Pharrell Williams must pay out about $5m (about £3.9m) after Gaye's estate claimed that Blurred Lines copied Got To Give It Up, following years of appeals.