California court sides with Disney in Pooh case

Winnie the Pooh in an undated image courtesy of the Walt Disney Co. A California appeals court on Tuesday declined to reinstate a long-running case against the Disney over royalties it paid for its popular Winnie the Pooh character.

LOS ANGELES (Reuters) - A California appeals court on Tuesday declined to reinstate a long-running case against the Walt Disney Co over royalties it paid for its popular Winnie the Pooh character.

In 2004, a Los Angeles trial court dismissed the case brought by the estate of Stephen Slesinger, the literary agent who helped popularize Winnie the Pooh in the United States, on the grounds that the Slesingers' legal team illegally obtained documents by trespassing on Disney property.

Slesinger's widow and daughter sued Disney in 1991, claiming the media company had underreported Pooh sales and owed the estate billions of dollars in royalties.

Disney has conceded in securities filings that the case exposed the company to huge potential losses if the Slesingers prevailed.

A spokesman for Slesinger's daughter, Pati, said she will appeal the latest decision to the state Supreme Court, and will proceed with a federal lawsuit seeking $2 billion in damages and to strip Disney of its rights to the Pooh character.

Disney attorney Daniel Petrocelli said the state case "never had merit from the outset and the only way it was kept alive so long was by breaking the rules."

"This misconduct was breathtaking and there was really no choice but to throw out the case," Petrocelli said in an interview.

Sales of Pooh merchandise generated more than $6 billion in retail sales in 2005, for which Disney realizes a licensing fee.

Slesinger, a New York television and film producer, obtained exclusive merchandising and other rights to the Pooh works from author A.A. Milne in 1930.

Slesinger and Milne's widow passed those rights to Disney in 1961 in exchange for royalties from the sale of Pooh products.