The 64-year-old sued the owners of Sydney boat Omega after his finger became caught in a chain while he tried to set anchor in Akuna Bay in Sydney's north on January 24, 2015.
He claimed they were negligent, alleging they failed in their duty to maintain the boat, warn him of the risk and properly instruct him.
But on Friday Justice Richard Cavanagh found in favour of the motor cruiser's owners, John William Axford and Jill Mary Axford, and the agent who hired it out.
The NSW Supreme Court judge didn't accept they failed to exercise reasonable care and ordered Farriss to pay their legal costs.
He said if Farriss had been successful, he would have awarded him $622,000 in damages.
The musician's solicitor on Thursday confirmed his client was "very disappointed" with the decision and was considering his options.
The judge referred to inconsistencies and changes in what Farriss recounted about what happened before the accident.
This included a denial of accidentally stepping on foot-operated buttons that moved the anchor chain up and down.
But the judge concluded that "at the very least, the plaintiff must be mistaken".
"The obvious explanation is that he trod on the up button and that caused the chain to move inwards, just as he had a hold of the chain with his left hand in front of the gypsy," he said, referring to the chain wheel.
"His left hand must have been pulled into the gypsy with his fingers being jammed, so as to cause severe lacerations to his fingers.
"This happened because he trod on the up button rather than any defect in the electrical circuitry."
Farriss's barrister had submitted his client had lost more than a finger, he had lost the ability to continue his vocation as a performing guitarist.
His damages bid included claims that INXS would have toured six times after 2015 netting more than $1 million.
While the judge found the band would have performed again but for his injury, he considered the suggested figures were "rather ambitious having regard to the amount he earned from touring in 2011 and 2012".
He also found it puzzling Farriss didn't call evidence from other band members, particularly his brother Jon who announced in 2012 the band would not be touring again.
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