Toysrus.com today won the right to sever its long-time partnership with Amazon.com, after a judge ruled the Seattle-based online retailer breached the agreement.

Amazon spokeswoman Patty Smith said the company strongly disagreed with the judge's ruling, and is reviewing its options.

Smith said Amazon would continue to sell toys on its site.

Toysrus.com, the online arm of Toys R Us, sued Amazon in May 2004, exposing fissures in an agreement once credited for helping both retailers remain viable toy sellers online.

Under its 10-year contract signed in August 2000, Toysrus.com agreed to select, buy and manage inventory, while Amazon agreed to develop the site, fulfill orders and handle customer service.

In the lawsuit, Toysrus.com charged Amazon with violating its exclusivity agreement by allowing other retailers to sell toys.

Amazon denied the claim and countersued, citing what it called its partner's "chronic failure" to meet toy demand during the 2003 holiday season.

In the countersuit, Amazon claimed that more than 20 percent of the toy store's best-selling items were unavailable on the site during the peak of the season.

Both parties sought to end the partnership and to collect damages.

New Jersey Chancery Court Judge Margaret Mary McVeigh wrote in the decision that the parties had a contractual obligation, and Amazon's actions damaged Toysrus.com's unique position, its ability to plan, while hindering its ability to strategize "due to the presence of other third-party toy sellers."

"Clearly, the parties reached a contractual obligation," the judge wrote.

Toys "R" Us said in a statement that its goal was to protect its brand, while continuing to provide a positive shopping experience for online customers. "This ruling allows us to do that," the statement said.

Monica Soto Ouchi: 206-515-5632 or msoto@seattletimes.com

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