A court in Moscow has upheld a verdict against a protester who was sentenced to indefinite compulsory psychiatric treatment in what activists have called a political prosecution.

Mikhail Kosenko, 38, was convicted in October on charges of rioting and assaulting a police officer at a protest on Bolotnaya Square on 6 May 2012, the day before Vladimir Putin was inaugurated for his third presidential term. A total of 28 people were arrested after clashes between demonstrators and police, but human rights defenders have said the case against them is an intimidation tactic against the street protest movement that emerged in 2011-12.

Despite witness testimony and publicly available video footage showing that Kosenko had tried to move away from a nearby scuffle during which a riot police officer was struck, a judge found him guilty and sentenced him to indefinite compulsory psychiatric treatment, concluding that his mental condition made him a danger to society. The riot policeman whom Kosenko allegedly struck told the court he did not know the defendant and could not remember who had struck him.

Kosenko has mental health issues after a concussion during an army hazing incident nearly two decades ago but has undergone outpatient treatment for it. In an article in the Russian publication Snob, three psychiatrists criticised the sentence and the prosecution's argument that Kosenko has a dangerous form of schizophrenia. Amnesty International has declared Kosenko a prisoner of conscience and called his sentence a return to the Soviet practice of confining dissidents to psychiatric institutions.

His sister, Maria Kosenko, told the Guardian after the appeal that she and her brother "had a small thread of hope that maybe some sort of mercy and fairness was possible, but it turned out that it wasn't. This was just another charade of Russian justice, which doesn't in fact exist."

Kosenko has been held in pre-trial confinement since 2012 and was not allowed to attend his mother's funeral in September.

Oleg Orlov, the chairman of the respected human rights organisation Memorial who testified at the trial, said he and a colleague were standing only a few metres away from Kosenko when the incident occurred. He said he was "100% confident that Mikhail Kosenko didn't commit the illegal actions that they have incriminated him in".

"It's a political trial and Kosenko is a political prisoner who was unfairly convicted," he said.

Human rights watchers have not been able to assess the conditions in which prisoners and defendants from the Bolotnaya protest are being kept and are not allowed access to the kind of psychiatric institution where Kosenko will be confined, Orlov said.

In February, a Moscow court convicted eight other Bolotnaya protesters of rioting, handing down sentences ranging from two-and-a-half to four years in prison, as well as one suspended sentence. Police detained more than 400 peaceful protesters outside the court, including opposition leader Alexei Navalny. After his detention, prosecutors successfully requested house arrest for Navalny, who faces fraud charges in another controversial case.

Kosenko's lawyers will appeal the verdict again but have little hope it will be overturned, his sister said.