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Judge Rules Amazon.com Breached Toys R Us Deal

March 03, 2006|From Associated Press

Amazon.com Inc. breached a deal with Toys R Us Inc. that was supposed to give the toy seller exclusive rights to supply some products on the Seattle-based firm's website, a New Jersey judge ruled Thursday as she allowed the companies to sever their online partnership.

Superior Court Judge Margaret M. McVeigh in Paterson did not award any damages.

Wayne, N.J.-based Toys R Us sued Amazon.com in May 2004, saying the company violated exclusivity rights by allowing others to sell some items -- toys, games and baby products -- on Amazon's site.

Toys R Us had maintained that Amazon had violated a 2000 deal in which the Internet firm, in exchange for $200 million, agreed not to let others sell the Toys R Us products being offered on Amazon.

Amazon countersued soon after, seeking to dissolve the partnership, citing "chronic failure" by Toys R Us to keep items in stock and to otherwise adhere to their contract.

Both sought monetary damages.

Now, visitors to the Toys R Us site are directed to Amazon for browsing and payment.

But shoppers will begin noticing a difference on the Toys R Us website this summer, the company said.

Instead of being directed to Amazon, online customers will pay through an independent Toys R Us website, said Kelly Cullen, a spokeswoman for Toys R Us.

The contract will be severed in about four months, Cullen said.

But if Amazon appeals and the court enters a stay, then the termination date could be pushed back.

Cullen said online shoppers wouldn't see much of a difference.

"It's going be the same product. Nothing will change on the Toys R Us end for the customer," she said. "You're not going through Amazon anymore."

Patty Smith, a spokeswoman for Amazon.com, said the company strongly disagreed with the judge's ruling.

"We are in the process of reviewing a number of different options," she said.

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