His parents sought $1.4 million to pay for medical expenses including twice-monthly testosterone injections he will need beginning at age 11 for the rest of his life.
The family also sought money for what his father described as the awkward moments his son would likely encounter as he grows up - "for how his son would feel in the locker room, or with a girl," said the parents' attorney, Richard A. Lane.
The boy was 11 months old at the time of the 2009 surgery for undescended testicles. He is now 5 and in kindergarten, The Oregonian reported. The jury deliberated six hours Thursday before finding for the hospital.
The newspaper didn't identify the family to protect the boy's privacy.
A month before the surgery, the boy's father had signed a written consent form. Lane said the parents researched the issue and believed a two-surgery procedure would create the smallest risk of losing his testicles, and they gave permission to surgeons to perform only the first stage of the two-stage process.
The hospital's attorney, Nikola Jones, said doctors got the couple's verbal consent to use the technique that was in the best interests of the boy, and that technique could be known only after surgeons began operating and assessed the location of the testicles.
Jones said an untrained resident failed to properly fill out the written informed consent form to reflect the possibility that doctors might try to relocate the boy's testicles in one surgery.
The loss of the boy's testicles was a "very unfortunate incident that resulted from the inherent risks of surgery," Jones said.
Studies have found that 2 to 6 percent of boys are born with undescended testicles. Often the testicles descend on their own over time, but sometimes they require surgery to move to the scrotum. Among other reasons, the surgery is performed to lessen the chances of cancer later in life.