Hugo's novel is a much-acclaimed classic
Pierre Hugo, great-great-grandson of the author, tried to ban the contemporary sequel of the classic novel, dubbed "Les Mis II" by Hugo's family.
He said Francois Ceresa's Cosette or the Time of Illusions broke French law protecting the integrity of works of art and their fictional characters.
But the Paris civil court ruled Pierre Hugo had no right to pursue the case on behalf of the celebrated author.
Damages
And it was noted that Victor Hugo had made it clear the novel should be put into the public domain on his death.
Pierre Hugo also claimed £425,000 in damages, saying Ceresa took advantage of the book that inspired the world-famous musical.
The publishers rejected criticism that it exploited France's literary heritage for commercial gain.
The action-packed sequel to Les Miserables by the award-winning writer Ceresa was published by Plon in May.
It turns the original villain in the original Javert into a hero.
Descendants of Hugo sent letters in May to President Jacques Chirac, the European Parliament and France's culture ministry urging them to speak out against Ceresa's book.
Furious
"Can one imagine commissioning the 10th symphony of Beethoven?" they asked in an open letter to French newspaper Libération.
They were furious at the change to the book's original ending, where Javert, who has furiously pursued Jean Valjean for violating his parole, jumps in the Seine.
The French Writers Society supported the family in their cause.
The case was being seen as a test for the literary world.
Ceresa argued that the controversy over his book was unfair, saying Les Miserables had been retold and adapted many times before.
A further sequel is due to be published by Plon soon.
Descendants of Hugo are still locked in action against the Walt Disney movie of the author's The Hunchback of Notre Dame in 1997.