A German court slapped down Vodafone on Tuesday when it ruled that rival cell service carrier T-Mobile could sell the iPhone without offering an unlocked version. Vodafone won a case in November forcing T-Mobile to offer the combination iPod and smart phone in both locked and unlocked versions, but that ruling was reversed on an appeal on Tuesday according to The International Herald Tribune.

Apple struck a deal with T-Mobile to be the exclusive iPhone carrier in Germany, but Vodafone claimed that violated laws in the country. Vodafone originally won an injunction in early November that required T-Mobile to offer a version of the iPhone with an unlocked SIM card so the handheld could be used with other cell service providers.

T-Mobile began offering the iPhone with either a locked SIM card, or -- for a steep price increase -- with an unlocked SIM card to comply with the German court ruling. T-Mobile filed an appeal contending that the iPhone's functionality was severely hampered when used on other cell networks because it is the only carrier in Germany offering EDGE-based wireless data service.

Now that T-Mobile was won its appeal, France is the only country requiring an option to purchase an unlocked iPhone. AT&T has an exclusive iPhone contract with Apple in the United States, and O2 has the exclusive contract for the United Kingdom.

T-Mobile plans to drop the unlocked SIM iPhone as soon as possible and return to its original plan of offering the unit only with its own service plans.