The 1623 work was taken from a display cabinet at Durham University in 1998.
Judge Richard Lowden called the folio "quintessentially English treasure" and said damage to it was "cultural vandalisation".
The case related to one of the surviving copies of the 17th Century compendium of Shakespeare's plays.
It was handed in by Scott to the world-renowned Folger Shakespeare Library in Washington DC a decade later.
The report continued:
Vice-chancellor Chris Higgins said it would initially be put on display in its present condition so people could see the damage done to it following its theft.
"The main book is intact but the title leaf, which showed ownership by Durham's Cosin's Library from Shakespeare's day, was torn out and the binding was cut off with a knife," he said.
"This was blatant cultural vandalism akin to taking a knife to Constable's The Hay Wain.The Folger Shakespeare Library were suspicious of a folio that surfaced on the market without a convincing collecting history.
When will museums, collectors and dealers become equally suspicious of antiquities that surface on the market without a collecting history that can be traced back to the period before 1970?
© David Gill