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California company accuses Toys R Us of trade secrets theft

As many savvy business owners know, competition in the technology market can be fierce. That competition sometimes spills over into the legal realm when companies believe that a former ally has stolen trade secrets and then set up shop as a business rival. Recently, a company which makes products aimed at kids accused Toys R Us Inc. of doing just that. The California-based company Fuhu Inc. brought a lawsuit against the gigantic seller of toys, alleging that it stole trade secrets from the Fuhu-produced tablet marketed for kids which Toys R Us sold in its stores last holiday season.

By January of this year, however, the distribution agreement between the two companies had fizzled, and Fuhu stopped selling its Nabi tablet via Toys R Us. Fuhu alleges that wasn’t the end of matters between the two companies, however. According to the court filing, Fuhu believes that Toys R Us stole some of its trade secrets when it designed a rival kid-centric tablet called Tabeo.

Fuhu’s lawsuit points to design elements such as a bumper around the tablet and pre-loaded apps as proof of the other company’s alleged wrongdoing. The suit further accuses Toys R Us of failing to advertise Fuhu’s tablet as promised and failure to order large quantities of the product. The company points to this as further proof that Toys R Us acted inappropriately when it later designed its own tablet geared towards children.

This California trade secrets lawsuit seems to be heating up just in time for the coming holiday season. Fuhu apparently hopes to gain an injunction preventing Toys R Us from selling its Tabeo product. While it’s not yet clear how this case will play out in court, it is just one more sign of how contentious the technology market can be. It’s crucial for companies to have a clear understanding of what their rights and responsibilities are so that they can protect their own trade secrets if the need arises. Sometimes, protecting those rights means filing a lawsuit to prevent another company from the improper use of trade secrets.

Source: Los Angeles Times, “Tablet maker sues Toys R Us over kid-oriented tablet computer,” Shan Li, Sept. 25, 2012