Stephen Slesinger Inc. sued Disney in 1991, accusing the media giant of failing to report sales of videos and computer software featuring the world's most famous bear.
Shirley Lasswell, whose former husband Stephen Slesinger acquired the merchandising rights to Winnie the Pooh from its creator A A Milne in 1930, and her daughter Pati Slesinger, claimed in the suit that Walt Disney did not pay royalties on unreported software sales of $35 million and on video sales of $3 billion.
The royalties claims were based on a 1961 contract between Disney and Stephen Slesinger Inc., renewed in 1983.
Disney argued that the merchandise in question was not covered by the contract. According to the company, the terms of the contract could not be stretched to cover videos and software, products that would have been beyond imagination in 1930, when the rights were disclosed to Slesinger.
Walt Disney, which makes an estimated $1 billion per year from sales of Winnie the Pooh merchandise, claimed in 2001 that it had reached an agreement with the heirs of A A Milne and illustrator E H Shepherd, which would give the company exclusive worldwide rights to the character. Stephen Slesinger Inc. disagreed.
In February this year, Disney sought to dismiss the lawsuit. It claimed that Stephen Slesinger Inc. had withheld key documents and hired a convicted criminal to steal evidence from Disney. It asked the court to throw out the suit due to its opponent's "pervasive misconduct and illegal activities."
On Monday, Superior Court Judge Charles McCoy agreed, ruling that the Slesinger firm "is dishonest and shows no remorse", according to Reuters. He did not consider the merits of the case, but found that the actions taken by the Slesinger firm so discredited them that the case could not proceed.
In a statement, the family responded:
"Of course, we are appealing to take our Pooh rights back. This decision unfortunately sends a strong message to corporate America that it is okay for companies like Disney to steal and renege on its contractual promises, and just fine to destroy a million pages of evidence along the way.
"This is just one round in a very long and complicated relationship and another delay of justice. What is in the garbage documents is that Disney committed fraud and the judge has thrown out the baby with the bathwater. This has not removed Disney's ongoing obligation to pay royalties to Slesinger family or remedy its unauthorised uses of Pooh."