TOYSRUS.COM WAGES LAWSUIT AGAINST AMAZON.COM

Toysrus.com Wages Lawsuit against Amazon.com

Toysrus.com, a component of No. 2 U.S. toy retailer Toys “R” Us, has filed a lawsuit against Amazon.com, alleging that Amazon violated its contract with Toysrus.com. The contract is said to grant Toys “R” Us exclusive rights to be the only seller of toy and game and baby products on Amazon.com until 2010.

In the complaint, Toys “R” Us said it has paid over $200 million dollars to Amazon in compliance with its contract. However, David J. Schwartz, Senior Vice President – General Counsel for Toys “R” Us, Inc., said that as of May 17, 2004 there were more than 4,000 products in exclusive categories being offered through competitive retailers on the Amazon.com platform, which violates their agreement.

An example of this problem stems from the fact that, as of the time of this article, many board games such as Battleship and Scrabble can be found for sale by other retailers under the “sports & outdoors” category.

“We would be happy to compete with other vendors in these categories, but we are not willing to pay for exclusivity that we are not receiving,” said Mr. Schwartz.

According to Reuters, Patty Smith, a spokeswoman for Amazon stated “We are relentlessly focused on increasing selection for our customers. We believe we can have multiple sellers in the toy category to increase selection and to offer products that (Toys R Us) doesn’t have.”

For the last four years, Toysrus.com has made quarterly payments to Amazon.com to maintain exclusive rights in the toy and game and baby categories. Toysrus.com reportedly plans to continue making these payments to Amazon.com while the matter is being resolved.