Lawyers representing the singer told the high court that the comments received "a barrage of press" at the time, and added that question marks over whether he is a racist "have never since receded".
Morrissey's counsel, David Sherborne, said that "the fight against NME is a matter of public record" and that "the battle lines for the trial have been firmly drawn".
The 52-year-old is attempting to sue NME's former editor Conor McNicholas and the magazine's publisher IPC Media for libel over the interview, claiming that he was deliberately characterised as a racist.
He was not at London's High Court yesterday to hear Catrin Evans, the counsel representing NME, say that the case should be thrown out as it was "not a genuine bid for vindication".
According to Evans, Morrissey dropped the complaint for three years before recently reigniting the dispute.
"The court can infer from this that there has been such a delay that is not a genuine bid for vindication," Evans said. "[The claim] simply didn't figure at the forefront of his mind."
She also noted that Morrissey "by his own actions" has since provoked "more topical" accusations of racism, such as in an interview with The Guardian in September 2010 in which he reportedly described Chinese people as a "subspecies".
"The fact that [Morrissey] has spent the three years since March 2008 recording albums, touring, promoting his new work and presumably doing well enough commercially to be able now to contemplate funding this libel claim, shows that his reputation has been unaffected. His fans apparently still love him," Evans told the court.
She further pointed out that the offending interview had never been published online by NME or other sources, and continues to exist "only in Morrissey fans' bedrooms".
The hearing was adjourned until today, when Justice Tugendhat is expected to decide on whether the claim should go to trial.
In 2008, Morrissey won an apology in court from Word magazine, after claiming that an article by journalist David Quantick suggested he might be a racist.