UPDATE 1-California gay marriage case hangs on technicality

* California state officials won't defend Prop 8 ban

* Could mark strategy change for pro gay marriage team

(Adds quotes from lawyers)

By Peter Henderson and Dan Levine

SAN FRANCISCO, Aug 17 (Reuters) - The next stage of California's gay marriage court battle rests on a procedural issue that could halt the case, leaving same-sex unions legal in California without a U.S. Supreme Court ruling to guide the country.

A San Francisco federal judge struck down the California same-sex marriage ban, known as Proposition 8, earlier this month and the case was immediately appealed to the federal Ninth Circuit Court of Appeals.

On Monday, those appellate judges set a hearing for December and put gay marriages on hold pending appeal. They made only one comment relating to legal issues, asking the team supporting the same-sex marriage ban to say why the case should not be dismissed due to lack of standing -- a term for the right to appeal.

California's state government would be the proper body to represent the case for upholding Prop 8, but neither the governor nor the attorney general is willing to pursue it. The defense of the ban has so far been mounted by an independent group that must prove its right to appeal.

The appeals court will make its decision on standing as the first step in its ruling on the case after the December hearing. If it decides proponents of the ban do not have standing, the judges will not even look at the main argument. That would be in line with standard judicial policy of making rulings as narrow as possible.

Prop 8 passed in November 2008, angering liberals who wondered how trend-setting California could fall in line with roughly 40 other states that ban same-sex marriage. On the other side, social conservatives were encouraged and boasted that their cause had national support.

That led to the federal court case, with an unusual twist: Governor Arnold Schwarzenegger, a Republican, and Attorney General Jerry Brown, a Democrat, did not defend the ban and will not appeal the pro-gay-marriage decision.

Federal District Court Chief Judge Vaughn Walker has questioned whether the group that defended the ban can appeal on its own.

"As it appears at least doubtful that (Prop 8) proponents will be able to proceed with their appeal without a state defendant, it remains unclear whether the court of appeals will be able to reach the merits of proponents' appeal," he wrote.

Jesse Choper, a law professor at the University of California, Berkeley, said the appeals court seemed to see standing as a "genuine issue." Legal analysts are uncertain how the court might rule.

Prop 8 supporters say they have the right to appeal since California's leaders will not, and that the institution of marriage will be harmed by allowing same-sex unions.

NEVER ABANDON WINNING ARGUMENT

Same sex marriage advocates, who entered the case saying they wanted to take the issue to the U.S. Supreme Court to set national policy, now appear ready to limit the immediate fight to California.

"Our strong preference is to litigate this on the merits all the way through (to the Supreme Court) and prevail, but we would never cast aside a winning argument," said Ted Boutrous, one of the lawyers taking on the California ban.

If California courts reach a decision in favor of gay marriage, "It would be a powerful weapon in the battle for marriage equality across this country," said Boutrous.

It would also encourage gay rights advocates who had long avoided a federal court battle for fear that the Supreme Court would rule against them.

Kate Kendell, executive director of the National Center for Lesbian Rights, said if California's ban on same-sex matrimony if lifted permanently, it would have a "catalytic effect" on the gay marriage debate across the United States.

Kendell favors pursuing a ruling limited to California, in the hope of securing a victory, rather than risk taking the fight to the Supreme Court.

Therese Stewart, the San Francisco deputy city attorney who helped fight the federal court case on behalf of gay couples said her team is "certainly discussing" whether to emphasize the issue of standing, which ultimately is in the courts' hands.

"I think the pro of having it stop here is that you've got a ruling that allows marriage now in California, and sort of ends the battle in California," Stewart said.

"And there's less risk in the Supreme Court. The pro of going all the way is a ruling that could be positive nationwide. Different people have different views," she said. (Editing by Cynthia Osterman and Chris Wilson)