Pooh's antics have been translated into more than 40 languages

The decision will be taken as a blow by Clare Milne's partner in the case, the Walt Disney Co.

Judge Florence-Marie Cooper of the US District Court in Los Angeles said Milne could not use a change in the 1998 US copyright law to reclaim rights to the honey-loving bear.

Ms Milne's grandfather sold the rights to literary agent Stephen Slesinger more than 70 years ago.

The decision is part of a complex legal battle between Disney, Ms Milne and literary agent Stephen Slesinger Inc, which is suing Disney for unpaid merchandise royalties.

If she had been successful, Walt Disney was aiming to sign a merchandising deal with Ms Milne. It would also have triggered an end to Slesinger's rights to Pooh next year.

AA Milne sold the marketing rights to Slesinger in 1930, then again in 1961 and 1983.

We believe the agreement is being misconstrued Daniel Petrocelli, Disney's lawyer

Slesinger made the first merchandise deal with Disney to sell dolls, books and other items in 1961.

But it took legal action against Disney in 1991, saying the entertainment giant cheated it out of royalties.

It also says millions more dollars are owed for videos, DVDs, computer games and other electronic products not specifically covered under its deal.

Disney lawyer Daniel Petrocelli planned to appeal against the decision, possibly as far as the US Supreme Court, to rule on whether a contract could supersede federal law.

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The legal battle has already become the longest-running lawsuit in Los Angeles Superior Court.

If Disney loses, it says the case will cost the company hundreds of millions of dollars, while Slesinger's heirs put the figure at least $1bn (�620m).

Winnie the Pooh is one of Disney's most popular characters.

In an earlier ruling, Judge Cooper said AA Milne's son, Christopher Robin Milne, had a chance to revoke the copyright in 1983 but did not act.

Clare Milne is the daughter of the late Christopher Robin Milne.

After Friday's decision Mr Petrocelli said: ""The court has found that the (1983) agreement should be enforced even though copyright statute said they should not be enforced.

"We believe the agreement is being misconstrued, and it shouldn't be used to take away ... Clare Milne's termination rights."