British company Mind Candy is behind the Moshi Monsters site, which allows children to adopt a virtual pet monster. Its characters include Lady Goo Goo, a sunglasses-wearing blonde baby who appears in "The Moshi Dance," a video that became an online hit after it was posted on YouTube in June.
The company had planned to release the song as a single, but this week's British High Court ruling bars it from "promoting, advertising, selling, distributing or otherwise making available to the public" any work involving Lady Goo Goo.
Law firm Mishcon de Reya confirmed it had represented Lady Gaga in the case, but did not give further details.
Mind Candy founder Michael Acton Smith said the ruling was "a huge disappointment."
"It was all done in the name of fun, and we would have thought that Lady Gaga could have seen the humor behind this parody," he said.
Oliver Smith, an intellectual property lawyer with Keystone Law, said the judgment's impact on other musical spoofs and tribute acts would likely be limited.
"English trademark law allows parody songs and tribute bands, but not if the names are too similar and one takes unfair advantage of the other's goodwill," he said.