The Los Angeles-based retailer recently shed 70% of its workforce and closed its European operations. On Thursday, it released disappointing third-quarter results with sales of $131.2 million for the three month period, around £100 million less than its original expectations.
Meanwhile, etoy (the same name without an ‘s’ and a lowercase ‘t’) has filed a lawsuit in a San Diego federal court seeking a definitive resolution to a long-running dispute with eToys. concerning rights in the "etoys" trademark.
The Swiss group of a dozen or so members, became known for their creations of what have been described as anti-corporate internet art projects. They once won a prestigious electronic arts award for a work which fooled search engines into sending visitors to their site.
The name dispute generated considerable public attention last year when eToys of the US filed a trade mark infringement suit against the art group in an attempt to gain control of the etoy.com domain which is owned and operated by etoy. The US retailer eventually agreed to drop the suit and pay up to $40,000 to etoy to cover legal fees it incurred in its defence on the grounds that the Swiss group pre-dates eToys.
The new lawsuit alleges that the "etoys" trademark registered to eToys is invalid and violates etoy's rights in its "etoy" trademark. The suit seeks the cancellation of the "etoys" trademark and seeks to prohibit the US company from infringing on the "etoy" trade mark. In addition, the Swiss group seeks an order transferring the etoys.com domain name to its control. In a separate action, etoy filed a formal opposition with the United States Patent and Trademark Office to eToys's trade mark application.
"Nobody invests to lose money," said Stamberger, a spokesperson for etoy. "We have attempted to negotiate a solution to this dispute for several months without success. We have several projects on hold until this situation is resolved. It just doesn't make business sense to spend money to promote a global brand when there is a dispute over its ownership. We owe it to all of our stakeholders to invest our resources wisely."
Chris Truax, one of the etoy lawyers in the US, said that his clients have a clear legal right to use the "etoy" trademark. "The etoy Corp. was receiving international recognition and awards for its work before eToys was even founded. It is unfortunate that it has come to this. However, eToys has continued to press claims that directly infringe on the rights of etoy. By obtaining a legal ruling establishing its superior claim on the ‘etoy’ trademark and preventing eToys from infringing on that mark, we can resolve this situation once and for all in a way that will be binding on eToys and its successors."