NEW YORK (Reuters) - The NFL dispute was back before the courts on Friday with lawyers for both sides presenting their case before the U.S. 8th Circuit Court of Appeals.

The players once again asked the court for an injunction to lift the three-month lockout imposed by the league while the league and owners argued that the decertification of the players' union should be ruled invalid and the case against the NFL dropped.

Kermit Bye, one of three judges presiding in the hearing, said the judges would make their ruling in "due course" and urged both sides to sort out their differences themselves.

"We wouldn't be all that hurt if you go out and settle that case," Bye said after the hearing.

"We will keep with our business, and if that ends up with a decision, it's probably something both sides aren't going to like, but at least it will be a decision."

Any ruling by the court is unlikely to resolve the dispute but will provide leverage when they sit down to renegotiate the collective bargaining agreement.

The players held the upper hand after the first court, before a federal judge, but the league successfully lodged an appeal that was heard by the same three judges adjudicating on the latest legal wrangling.

The feuding sides have also held a series of court-ordered mediation talks but have declined to comment on them because of a confidentiality agreement, although the pervading mood is that talks are slowly going forward.

The players have been locked out by the owners for nearly 12 weeks after talks on a new collective bargaining agreement broke off and the players union decertified. Nine of the players then filed an antitrust lawsuit against the NFL.

The dispute threatens the prospects of the 2011 season, due to start in September, starting on time, and could cost the sport about $1 billion in lost revenues.

NFL commissioner Roger Goodell last week warned that time was running out although he said the league intended to play a complete 2011 season and hold the Super Bowl in Indianapolis.

(Reporting by Julian Linden; Editing by Alastair Himmer)