Amazon has filed a counterclaim against Toysrus.com as the two companies escalate their battle over an increasingly contentious business relationship.
Amazon.com has asked the US superior court to declare that Toysrus.com breached an almost four-year-old online product sales agreement through its "chronic failure" to have enough stock on hand to fill customer orders.
Amazon.com is asking the court to terminate its agreement with Toysrus.com and award it at least $750m (£414m) in damages for lost revenue over the life of the deal.
Toysrus.com, which is a subsidiary of retailer Toys R Us, sued Amazon.com in May, alleging that under the original agreement between the two companies Toysrus.com would be the exclusive seller of toys, games and baby products on Amazon.com's website.
Instead, Toysrus.com said in its original lawsuit that more than 4,000 products are being offered for sale from competing retailers, which "violates the letter and spirit of our agreement."
Toysrus.com stopped selling items on its own website when it reached the deal with Amazon.com and makes quarterly payments to Amazon.com to maintain its exclusivity arrangement. The contract was set to continue until 2010.
Susan McLaughlin, a spokeswoman for Toys R Us, said, "We believe this counterclaim has no merit. We are currently engaged in mediation and have agreed to avoid additional commentary." Amazon declined to comment.
Todd R Weiss writes for Computerworld