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Toys R Us sued for stealing trade secrets

Fuhu Inc. says toy store ripped off the design of its children’s tablet

The maker of a children’s tablet computer is suing Toys R Us, claiming the nation’s largest toy retailer stole trade secrets for its popular Nabi tablet.

Fuhu Inc. claims in its suit, filed in a San Diego federal court yesterday, that Toys R Us agreed to exclusively sell the Nabi during last year’s holiday season, then used the relationship to rip off the toy’s design and make the Tabeo, a similar product that Toys R Us will launch this month. In its suit, Fuhu claims Toys R Us committed fraud, breach of contract, unfair competition and misappropriation of trade secrets.

"We shared with them the whole ecosystem of the [Nabi] tablet," Jim Mitchell, Fuhu’s CEO, said in a statement.

Fuhu also says in its complaint that despite the toy retailer’s agreement to exclusively sell the Nabi last year, it did almost no promotion of the product. It also claimed that, in the end, Toys R Us purchased—for the entire holiday season—only enough of the Nabi tablets it initially said could be sold in one day.

"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 said in its suit.

Thomson Reuters reports that a Toys R Us spokeswoman said the company would not comment on the suit until it has time to review it.

Read more recent InsideCounsel coverage of trade secrets:

Labor: A litigator’s perspective on trade secret protection programs

Labor: 4th Circuit decision lets disloyal employees off the hook

Ex-Motorola employee gets four years for trade secret theft

Protecting the crown jewels: How to deal with international trade secret theft


Cathleen Flahardy

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