Ruling on Pooh Is a Setback for Disney

In a blow to Walt Disney Co., a federal judge has tentatively ruled that the granddaughter of British author A.A. Milne cannot reclaim the U.S. merchandising rights to Winnie the Pooh, attorneys in the case confirmed Friday.

The ruling -- if finalized -- would be a major victory for the family that has long held the merchandising rights and has tussled with Disney for more than a decade, claiming that the entertainment giant owes the family hundreds of millions in unpaid royalties.

U.S. District Judge Florence-Marie Cooper in Los Angeles plans to hear arguments in the case Monday. In a tentative ruling Thursday, Cooper said that Clare Milne, the author’s only surviving heir, cannot terminate the rights held by heirs of Stephen Slesinger, a New York literary agent who acquired the U.S. merchandising rights to Pooh in 1930.

David Nimmer, an attorney representing Milne, had asked for the termination under the 1998 Sonny Bono Copyright Act, which allows heirs to regain merchandising rights under certain circumstances.

Nimmer on Friday declined to concede defeat, saying, “We believe in the strength of our position and we look forward to presenting our case on Monday.”

The ruling is significant because if Clare Milne’s legal effort is successful, she probably would turn the reclaimed merchandising rights over to Disney and the company would be freed of royalty obligations to the Slesingers. If the judge’s ruling stands, Disney would owe royalties to the Slesinger family until at least 2024.

Disney has said in Securities and Exchange Commission filings that a ruling against it in its struggle with the Slesingers could cost the company hundreds of millions of dollars.

Disney purchased the merchandising rights to the bear in 1961 from Shirley Slesinger Lasswell, the widow of Stephen Slesinger.

Since then, Disney has paid the Slesinger family more than $65 million in royalties -- recently as much as $10 million a year.

In 2001, Disney paid $352 million to buy the remaining Pooh rights from various Milne heirs in England.

The bear has proved immensely lucrative to Disney. At the peak of Winnie the Pooh’s popularity in the late 1990s, it brought in more than $1 billion in revenue annually to Disney and companies it licensed to produce Pooh products.

Bonnie Eskenazi, an attorney representing Lasswell and her daughter, Patricia Slesinger, said it was too soon for celebration.

“But this would be a major victory,” she said.

Disney’s attorney, Daniel Petrocelli, said the tentative ruling, if finalized, is likely to be appealed.