Amazon.com countersues Toysrus.com

Online retailer Amazon.com Inc. has filed a counterclaim against Toysrus.com as the two companies escalate their battle over an increasingly contentious business relationship.

In its filing Monday in New Jersey Superior Court in Passaic County, Amazon.com asked the court to declare that Wayne, N.J.-based Toysrus.com breached an almost 4-year-old online product sales agreement through its "chronic failure" to have enough stock on hand to fill customer orders.

Seattle-based Amazon.com is asking the court to terminate its agreement with Toysrus.com and award it at least US$750 million in damages for lost revenue over the life of the deal.

Toysrus.com, which is a subsidiary of retailer Toys R Us Inc., sued Amazon.com in May, alleging that under the original August 2000 agreement between the two companies, Toysrus.com would be the exclusive seller of toys, games and baby products on Amazon.com's popular Web site.

Instead, Toysrus.com said in its original lawsuit, more than 4,000 products are being offered for sale from competing retailers on Amazon.com's Web site, which "violates the letter and spirit of our agreement."

Toysrus.com stopped selling items on its own Web site when it reached the deal with Amazon.com and makes quarterly payments to Amazon.com to maintain its exclusivity arrangement, according to Toysrus.com.

The contract was set to continue through 2010.

A spokeswoman for Amazon.com said the company has no further comments on Monday's court filing.

Susan McLaughlin, a spokeswoman for Toys R Us, said in a statement, "We believe this counterclaim has no merit. We are currently engaged in mediation and have agreed to avoid additional commentary."

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