A US judge has ruled that a lawsuit against Apple and AT&T can go ahead, despite Apple's request to have the suit dismissed.

The $1.2m suit alleges that Apple and AT&T knowingly sabotaged unlocked iPhone handsets with the release of the iPhone 1.1.1 software update.

The suit claims that the companies violated US trade and copyright laws which had allowed users to alter their phones. The plaintiffs are suing both companies for violating federal antitrust laws.

Apple has long claimed that it would not deliberately harm unlocked phones, but that the company could not guarantee that updates would not harm modified handsets.

The company had warned users about possible complications with unlocked phones prior to the release of the update.

District Judge James Ware denied Apple's request to dismiss the claims, thus allowing the case to move forward. He did, however, grant motions to limit the claims to the states of California, Washington and New York.