The Shulchan Aruch (H”M 418:12) and the Rambam (Nizkei Mamon 14:13) rule against Rabbi Yehudah, and hold the store owner liable for his Chanukah candle. The reasoning given is that although the store owner had license to put the candle outside, to fulfill the mitzvah of Chanukah, he still is responsible to ensure no damage comes from it.
The Gemora discusses whether Rabbi Yehudah’s exclusion of liability in the case of a Chanukah candle indicates that it should be below ten tefachim. The Gemora concludes with a limit of twenty amos. There is discussion in the poskim about reconciling the two measures. The Shulchan Aruch (O”H 671:6), following the Rosh, rules that the optimum placement (l’chatchila) is below ten tefachim, but the absolute limit (b’dieved) is twenty amos. The Gr”a explains that even though the Gemora deflected the proof from the Mishna, we follow the straightforward implication of the Mishna. The Rambam (Chanuka 4:7) only mentions the measure of twenty amos. The Rambam understood that the two measures are a dispute, and ruled like the opinion of twenty amos. The Rambam therefore could have held the store owner liable simply because he should have placed the candle higher, but nonetheless made the more fundamental statement that performing a mitzvah does not exempt a person from damages. This statement is a more general one, and has implications in other cases, as the Gr”a points out (H”M 418:28). The Shaarei Teshuva (O”H 761:8) points out that the Chachamim and Rabbi Yehudah’s dispute, as detailed in other sources, does not relate to different opinions on the location of the Chanukah candle, but rather on this fundamental question of exemption due to religious activity.