But Conservative housing spokesman Nigel Waterson said criminal prosecution was up to the Criminal Prosecution Service.

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The Canadian company announced Wednesday that its chief product officer, Sheree Waterson, was leaving the firm this month.

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The Appeal Court ruled the comments did not imply Mr Waterson had broken the law or expenses rules.

BBC: Stephen Lloyd MP

Tory Nigel Waterson was elected in 1992 with a respectable 5, 000 vote majority.

BBC: NEWS | VOTE 2001 | RESULTS & CONSTITUENCIES | Eastbourne

Those words did not impress Eastbourne MP Nigel Waterson, who won a 2, 154 majority over his Lib Dem rival last year.

BBC: Charles Kennedy

The incident caused a drop in the company's stock price, and Lululemon Chief Product Officer Sheree Waterson left her post in April.

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Paul Waterson, chief executive of the Scottish Licensed Trade Association - which represents pubs and clubs - said it was time for ministers to take strong action.

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Mr Waterson said he was disappointed by the ruling.

BBC: Stephen Lloyd MP

Mr Waterson told BBC News Online: We have heard all this before from the Liberal Democrats but since at the election I ensured my majority went up, I'm pretty relaxed about this sound and fury.

BBC: Charles Kennedy

The libel case had been brought against him in December 2010 by Mr Waterson, who lost his Eastbourne seat to Mr Lloyd, and was cleared of any wrongdoing over his expenses claims for a second home in outer London.

BBC: Stephen Lloyd MP