* Court denies Sturm's motion to dismiss case
* Decision allows Sturm to continue selling refills
* Green Mountain shares down 5 pct (Adds comments from companies, background on Green Mountain's licensing deals)
By Mihir Dalal
BANGALORE, March 11 (Reuters) - A U.S. court denied Green Mountain Coffee Roasters Inc's request for an injunction to stop Sturm Foods from selling coffee refills for Green Mountain's one-cup Keurig coffee machines.
The court also rejected a motion by Sturm Foods -- which was bought by diverse food products maker TreeHouse Foods in December 2009 -- to dismiss the case for its failure to state a claim.
The Delaware federal court's ruling allows Sturm Foods to continue selling its "Grove Square" branded instant coffee for Keurig machines. Sturm is the only company currently selling refills for Keurig without a license.
Green Mountain's patents have been cited as a key reason by some analysts for its continued dominance of the U.S. single-cup coffee market of which it has a more than 80 percent share.
The Waterbury, Vermont-based company has licensing deals with companies like J.M. Smucker and Dunkin' Donuts.
On Thursday, it signed an agreement with Starbucks Corp that will allow the world's biggest coffee chain to sell its coffee for Keurig.
However, these companies are to sell coffee packaged in Green Mountain's patented K-Cups -- plastic packs of coffee and tea -- unlike Sturm, which is selling instant coffee.
Green Mountain spokeswoman Suzanne Dulong said the company does not comment on pending litigation matters. TreeHouse Foods did not return calls requesting comment.
Shares of Green Mountain, which jumped 41 percent on news of the Starbucks deal on Thursday, were down 5 percent at $58.47 in afternoon trading on Nasdaq. (Reporting by Mihir Dalal in Bangalore; Editing by Saumyadeb Chakrabarty)