Hundreds of pupils and schools who united in an unprecedented legal move over GCSE exam grades have lost their High Court challenge.
Judges ruled that teenagers hit by changes to English grade levels were treated unfairly but that exam boards and the regulator Ofqual had not acted unlawfully.
The alliance, which also included scores of local councils and teaching unions, sought a judicial review after grade boundaries were increased by 10 marks between January and June.
It accused AQA and Edexcel of an "illegitimate grade manipulation" and "statistical fix" involving Ofqual and called for the papers of around 10,000 pupils affected to be remarked.
But the claim was dismissed by Lord Justice Elias and Mrs Justice Sharp, sitting in London.
The ruling will be a relief to Education Secretary Michael Gove, who has expressed his determination to drive up school standards.
Lord Justice Elias said Ofqual had appreciated there were features that had operated unfairly and noted the regulator had proposed numerous changes to avoid future problems.
But he added: "I am satisfied that it was indeed the structure of the qualification itself which is the source of such unfairness ... and not any unlawful action by either Ofqual or the AOs (exam boards)."
The alliance had argued that pupils who sat the exam in June but missed out on a C grade had been unjustifiably "clobbered" because of a warning from the regulator about grade inflation.
Statistical predictions had indicated too many would achieve at least a C so it was decided to raise the boundaries, Clive Sheldon QC told the court.
He claimed this resulted in "conspicuous unfairness and an abuse of power" and called for the pupils to be treated in the same way as those who took the exams in January.
After the court defeat, headteacher Joan McVittie said the alliance was "bitterly disappointed" and pointed out that the judges had agreed children were treated unfairly.
"This was about the law and it wasn't about fairness. That is a hard lesson for children to learn," she said.
Russell Hobby, general secretary of the National Association of Head Teachers, said: "Grading decisions were unfair and an injustice was done to many thousands of pupils.
"While boundaries have not been restored, we hope this action will demonstrate to Ofqual and the exam boards that they should not act like this again."
AQA and Pearson UK, which oversees Edexcel, admitted there were lessons to learn from the debacle and vowed to work more closely with the regulator, ministers and teachers.
Ofqual welcomed the judges' agreement that the value of GCSE English would have been "debased" had the regulator given in to the alliance's demands.
"We know some students and schools will be disappointed with this. We understand that. But it's our job to secure standards," chief regulator Glenys Stacey said.
The Department for Education said: "The judgement demonstrates that overall Ofqual got it right last year. Attention can now focus on reforming GCSEs ready for first teaching in 2015."
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