* Denner will resume coffee pod sales in about three weeks
* Nespresso will continue legal action-spokesman
ZURICH, March 4 (Reuters) - Swiss supermarket Denner may sell its Nespresso-compatible coffee capsules, a Swiss court ruled on Friday, dealing a blow to Nestle (NESN.VX) as it tries to fend off competition for its premium coffee brand.
Denner, owned by Swiss retailer Migros, had launched its version of Nestle's top-selling Nespresso pods in December, though sales were halted after Nestle took legal action.
"We are very pleased. It will take about three weeks until we can again sell our capsules as we were not allowed to produce or store them since the preliminary ruling in January," Denner spokeswoman Nicole Schoewel said.
Nespresso will continue with the legal action to protect its intellectual property, spokesman Julian Liew said.
The commercial court in St. Gallen said only the three-dimensional form of Nespresso capsules was protected under the registered trademark but not the capsule's compatibility with Nespresso machines, lifting a selling ban imposed in January.
Nestle and its Nespresso unit, which generated sales of more than 3 billion Swiss francs ($3.23 billion) in 2010, have 30 days to file a lawsuit, the court said.
In a separate case, the Zurich commercial court found last month that the Denner coffee pods did not infringe Nespresso patents. [ID:nLDE71K24G]
Last year, Nespresso and Nestle sued U.S. food group Sara Lee SLE.N and Swiss-based Ethical Coffee Co, which are both selling Nespresso-compatible coffee pods. ($1=.9303 Swiss Franc) (Reporting by Silke Koltrowitz; Editing by Jon Loades-Carter)