Ruling on Thursday in New Jersey, Judge Margaret McVeigh stated that Amazon had breached the terms of its contract with Toys 'R' Us, and allowed the two companies to end their troubled business relationship.
Toysrus.com had signed a $200 million exclusivity deal with Amazon in 2000, which stipulated that it would be the only authorised seller of baby products, toys and games on Amazon.com.
However the toy retailer in 2004 accused Amazon of breaching the terms of the deal, and obtained an injunction preventing Amazon from selling such products offered by other firms.
Successfully obtaining a partial easing of the injunction on the grounds that it would otherwise be prevented from launching a new graphical user interface, Amazon launched a countersuit against Toys 'R' Us, requesting that the exclusivity agreement be ended, and that it be awarded $750 million in damages.
The online retail portal cited in its countersuit Toys 'R' Us' "chronic failure" to keeps its online store stocked with the most desirable toys.
According to reports in the US media, the contract between the two firms is expected to be severed in around four months.
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