Online retailer Inc. has filed a counterclaim against 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, asked the court to declare that Wayne, N.J.-based 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 is asking the court to terminate its agreement with and award it at least US$750 million in damages for lost revenue over the life of the deal., which is a subsidiary of retailer Toys R Us Inc., sued in May, alleging that under the original August 2000 agreement between the two companies, would be the exclusive seller of toys, games and baby products on's popular Web site.

Instead, said in its original lawsuit, more than 4,000 products are being offered for sale from competing retailers on's Web site, which "violates the letter and spirit of our agreement." stopped selling items on its own Web site when it reached the deal with and makes quarterly payments to to maintain its exclusivity arrangement, according to

The contract was set to continue through 2010.

A spokeswoman for 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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