Both companies have been ordered to work together to resolve the
issue.
Toysrus.com sued Amazon.com in May, alleging that Amazon had
violated the agreement between them. It stipulated that Toysrus.com
would be the only authorised seller of toy, game and baby products
on the Amazon.com platform.
On the strength of the agreement, signed in August 2000,
Toysrus.com stopped selling products through its own web site and,
according to a New York Times report, pays Amazon.com the sum of
$50 million a year for the 10 year duration of the contract.
The lawsuit accused Amazon.com of breaching the exclusivity part
of the deal. In early June it 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 $750 million in damages because of,
according to press reports, a "chronic failure" on the part of
Toysrus.com to comply with the contract terms by failing to have
sufficient products in stock, or to choose the top selling
toys.
In July, Amazon.com went to court again, arguing that the
injunction would prevent it launching a new graphical user
interface service in September, designed to allow smaller retailers
to advertise their own products on the Amazon site.
As a result, according to the Associated Press, Judge Margaret M
McVeigh eased the injunction a little - allowing the launch to go
ahead on the condition that users did not sell those products
offered by Toysrus.com on an exclusive basis.
Judge McVeigh then added that in her opinion it was likely that
Toysrus.com would be able to show that Amazon.com had breached the
original contract.
The Associated Press reports that Toysrus.com has now asked the
court to fine Amazon.com, arguing that it has breached both the
June injunction and the July order by allowing its exclusive
products to be advertised by other companies.
Toysrus.com backed its claim with evidence from a computer
consultant who had managed to list six of the exclusively marketed
items on the site, while pretending to be a small retailer.
In her ruling on Thursday, Judge McVeigh stated that she did not
think the breaches so severe that she should award sanctions now,
but she ruled that she would in future fine Amazon.com $1,000 for
each product marketed in breach of the injunction. The on-line
retailer was also ordered to pay costs.
The judge was concerned that the breaches showed that Amazon's
technology was not going to be adequate to allow Amazon to comply
with her rulings, and ordered both parties to work together to
resolve matters.
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