Ocado is being sued by Norwegian rival AutoStore over claims that the online supermarket breached a patent for its warehouse technology.
The FTSE 100 firm, which this week became the most valuable retailer on the UK stock market, must stop selling its technology and pay damages, according to court documents filed in the US and UK.
Ocado’s share price fell 5 per cent after the news.
Karl Johan Lier, chief executive and president of AutoStore, said: "Since 1996, AutoStore has developed and pioneered technology that has revolutionised retail storage and order fulfilment, and is driving the growth of online retail.
"Our ownership of the technology at the heart of Ocado's warehousing system is clear. We will not tolerate Ocado's continued infringement of our intellectual property rights in its effort to boost its growth and attempt to transform itself into a global technology company."
Ocado has only a 1.7 per cent share of the UK grocery market, but is valued at over £20bn thanks to its state-of-the-art technology for robotically operated warehouses.
The tech has helped to win partnership deals with supermarket chains around the world including Morrisons in the UK.
AutoStore said Ocado has been its customer since 2012. It claims that its storage system and robots are the foundation on which the “Ocado Smart Platform” (OSP) technology.
Ocado declined to comment immediately after the news.
A pioneer in online food shopping, Ocado struggled for years to turn a profit after being founded by three former Goldman Sachs bankers in 2000.
In recent years, lucrative partnership deals with companies including US supermarket giant Kroger have helped the company become one of the UK’s most valuable technology companies.
The British company has seen its share price surge since the coronavirus pandemic began as online grocery sales have risen rapidly.