By Eric Auchard and Harro Ten Wolde
FRANKFURT (Reuters) - A Frankfurt judge granted a reprieve to Uber, the online transportation service, setting aside a temporary injunction issued two weeks ago against the Silicon Valley company from operating a novel car-sharing service across Germany.
Frankfurt Regional Court Judge Frowin Kurth said on Tuesday that the issues in the case brought against Uber by German taxi operator group Taxi Deutschland deserved a fuller airing in court, but lacked the urgency for a temporary injunction.
"There could still be grounds for an injunction" against Uber, Kurth said in deciding on the company's appeal of the court's original decision. "But during our deliberations it became clear there were no grounds for an immediate injunction."
The lawsuit, which pits taxi operators against the fast-growing U.S. start-up recently valued at around $18 billion, has underscored Germany's mounting unease over the impact of digital technology on established businesses and institutions.
Taxi Deutschland had sought the injunction as part of a civil lawsuit to bar the company's ride-sharing service, citing what it saw as unfair competition by Uber against the professional taxi drivers whom it represents.
The original injunction barred Uber from using its Uberpop mobile phone app to connect ride-sharing drivers to potential passengers, ruling that Uber's network of volunteer drivers lacked the commercial licences to charge passengers for rides.
Each infraction of the court's injunction carried fines of up to 250,000 euros (200,098.87 pounds). Uber quickly appealed the ruling, leading to Tuesday's hearing.
Taxi Deutschland said in a statement it was baffled by Tuesday's decision.
"The taxi industry accepts competitors who comply with the law. Uber does not. That is why we are announcing today that we will go immediately to appeal," it said.
SKIRMISHES
Uber Germany spokesman Fabien Nestmann said the company was pleased with the move to lift the injunction. "Germans want to be able to share their cars, so this is a real step in the right direction," he said.
The judge said he would issue a written ruling eventually.
Four-year-old Uber, which allows users to summon taxi-like services on their smartphones, has faced down regulatory scrutiny and court injunctions from its early days, even as it has expanded rapidly into roughly 150 cities around the world.
The company offers two main services, Uber Black, its classic low-cost, limousine pick-up service, and Uberpop, a newer ride-sharing service, which links private drivers to passengers - an established German practice that nonetheless exists in a grey area of rules governing commercial transport.
The judge said during the hearing that he considered Uber to be a direct competitor with taxi operators, rebuffing Uber's position that it merely operates an online marketplace to connect drivers with passengers. This, it had argued, should free it from rules governing taxis and other commercial drivers.
German law allows drivers to pick up passengers without a commercial licence if they charge no more than the operating cost of the trip. As the middleman connecting drivers and passengers, Uber stands to take a cut of any charges.
Uber has had to fend off legal challenges in recent months in Berlin and Hamburg, as well as in several other countries across Europe, on issues ranging from licensing to whether its drivers are fully insured to carry passengers.
Such skirmishes with taxi operators and local authorities have shadowed it in many cities where it operates, starting in its home base of San Francisco. Active in 43 countries, Uber so far has only pulled out of one city -- Vancouver, Canada.
Taxi drivers across Europe caused chaos in June by protesting against the service, but Uber has continued to grow in popularity. Frankfurt taxi operators have taken the next step in their campaign by going after Uberpop drivers.
Last week, it won a decision from a Frankfurt court, which issued separate injunctions against two, unnamed Uberpop drivers for driving without permits.
In an interview broadcast on CNN on Sunday, Uber Chief Executive Travis Kalanick said his company considered itself in a political campaign against an entrenched taxi industry.
"The candidate is Uber. And our opponent is the taxi cartel," Kalanick told CNN.
The German Economy Ministry issued a statement before the ruling saying the country needed to make room for new, digital business models such as Uber's, alongside existing businesses. It also called for a hard look at laws governing transport and competition.
(Additional reporting by Sabine Wollrab; Editing by Mark Potter and Crispian Balmer)