Apple's iPhone Exclusivity Upheld

A German court sides with T-Mobile on sales of locked iPhones.
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Deutsche Telekom's

(DT) - Get Report

T-Mobile

unit won a German court decision upholding the telco's deal to exclusively sell locked

Apple

(AAPL) - Get Report

iPhones.

The decision is a defeat for

Vodafone

(VOD) - Get Report

, which sought an injunction to prevent T-Mobile from selling so-called locked iPhones under the requirement that users sign two-year contracts.

The move comes two weeks after a German court ordered T-Mobile to stop selling locked iPhones. T-Mobile responded by announcing it would sell unlocked, contract-free iPhones for $1,481, in an effort to honor the decision and compensate for the loss of potential revenue. T-Mobile's regular price for the iPhone is $591.85.

The challenge by Vodafone could have threatened Apple's unique royalty and revenue sharing arrangement with its telco partners. In exchange for exclusive iPhone selling rights, phone companies agreed to share a percentage of the monthly subscription revenue with Apple. It is estimated that Apple enjoys a 10% cut of the proceeds.

Deutsche Telekom shares rose 40 cents to $22.54 and Apple was up 59 cents to $179.45 in midmorning trading Tuesday.