- The Washington Times - Thursday, April 2, 2009

NEW YORK (AP) - An appeals court in New Jersey has ruled against Amazon.com Inc. in its long-standing legal dispute with Toys R Us Inc., opening the door for a lower court to consider damage awards to the toy seller over a failed partnership.

The three-judge state Appeals Court panel agreed with the lower court’s 2006 ruling that said Amazon breached a partnership that was supposed to give Toys R Us exclusive rights to supply some toy products on Amazon’s site.

The lower court judge had allowed the companies to end their online partnership early, but the judge also declined to award either party damages.

Both sides appealed, and in a March 24 decision written by Judge Anthony J. Parrillo, the appeals court directed the lower court to reconsider Toys R Us’ damage claims, while denying Amazon’s claims.

Wayne, N.J.-based Toys R Us joined up with Seattle-based Amazon in 2000 after the toy retailer’s Web site, Toysrus.com, suffered a disastrous 1999 holiday season in which some customers’ toys were not delivered until after Christmas. That partnership was supposed to last through 2010.

A dispute began in 2004 when Toys R Us sued Amazon, alleging the Web retailer violated contractual exclusivity rights by letting others sell some products on Amazon.com.

Amazon responded by citing Toys R Us’ “chronic failure” to keep items in stock.

During the trial that led to the 2006 ruling, a paid expert witness for Toys R Us estimated that the exclusivity rights the company paid for but did not get totaled more than $65 million from February 2003 _ when Toys R Us argued Amazon began breaching the deal _ until the trial started in September 2005.

Toys R Us has not disclosed how much it plans to seek in damages.

Amazon spokeswoman Patty Smith said the company had no comment.

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