Amazon wins reprieve against Toysrus.com

Injunction lifted

By OUT-LAW.COM, 14th April 2005

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An appeals court this week lifted an injunction from Amazon.com in its dispute with Toysrus.com, according to the Associated Press. It follows a lawsuit filed last year by the toy seller, accusing Amazon.com of breaching an exclusivity agreement.

Toysrus.com, the internet subsidiary of Toys 'R' Us, sued Amazon.com in May 2004. It alleged that Amazon.com had violated an agreement signed in 2000 stipulating that Toysrus.com would be the only authorised seller of toy, game and baby products on the Amazon.com platform – a deal for which Toysrus.com is reported to have agreed to pay $200m.

The lawsuit accused Amazon.com of breaching the exclusivity part of the deal. In early June, Toysrus.com won an injunction, prohibiting Amazon.com from allowing other sellers to use the site for the sale of toys, games and baby products.

Amazon.com then filed its own lawsuit, asking the court to end the agreement and to award it $750m in damages. According to press reports, it accused Toysrus.com of a “chronic failure” to comply with the contract terms by failing to have sufficient products in stock, and in failing to choose the top-selling toys.

The injunction, which had already been eased following arguments by the bookseller that the injunction would prevent it launching a new graphical user interface service, has now been lifted.

According to the Associated Press, the State Appeals Court ruled that Judge Margaret McVeigh had not properly considered the language of the contract between the two firms when granting the injunction.

Representatives from both Amazon and Toys R Us refused to comment on the ruling.

The case is due to go to trial on 13 June.

OUT-LAW.COM is part of international law firm Pinsent Masons.