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On Monday, the maker of the Nabi tablet computer for children sued Toys R Us Inc in San Diego, seeking to stop Toys R Us from selling Tabeo ahead of the holiday season. Fuhu Inc, the maker of Nabi claims that the world’s largest toy retailer stole trade secrets from Fuhu, and it was with this purpose in mind, Toys R Us had agreed to become the exclusive seller of Nabi last year. That exclusive agreement ended in January this year.
The launch of Tabeo by Toys R Us would be increasing the competition in the market of tablets for children. Currently the market is dominated by Nabi and LeapFrog Enterprises Inc’s LeapPad.
According to the lawsuit filed by Fuhu, Toys R Us agreed in October 2011 to become the exclusive Nabi distributor, but did “virtually no promotion” and ordered for the entire holiday season, a little more than what Toys R Us said could be sold in one day.
Fuhu accuses Toys R Us of breach of contract, unfair competition, fraud, and trade secret misappropriation. It also says that Toys R Us copied Nabi’s butterfly-shaped bumper, which helps to protect the tablet. Fuhu said that the illogical behavior of Toys R Us in following the exclusive distribution agreement for Nabi became meaningful when it launched Tabeo this month.
The lawsuit alleges, “Toys R Us used Fuhu’s trade secrets and confidential information to start selling Tabeo, which systematically attempts to replicate the Nabi experience, far earlier than Toys r Us could have done otherwise, if at all.”
Fuhu is seeking to put a ban on the sale of Tabeos and also asking that all Tabeos be turned over to Fuhu, alongside unspecified damages.
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The case is Fuhu Inc v Toys “R” Us Inc, Case. No. 12-CV-2308, U.S. District Court, Southern District of California.
