Nabi maker Fuhu suing Toys R Us for using “trade secrets” in designing the Tabeo kid-friendly tab

September 25, 2012
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    With Apple’s iPads leading so comfortably in global tablet sales, one might think that there isn’t a lot of dough to be made by mainstream Android tab makers, let alone by manufacturers focusing on niches such as “kid-friendly” slates.

    However, a new lawsuit filed in San Diego federal court might raise a few eyebrows, proving that there’s actually a lot at stake even in such a “minor” war. Fuhu, a tech company founded in 2008 and best known for creating the Nabi Tablet for children, is suing giant retailer Toys R Us for fraud, breach of contract, intellectual theft and a couple of other such goodies.

    As some of you might remember, Toys R Us unveiled a 7-inch kid-friendly tablet of its own a couple of weeks ago, called the Tabeo. The gadget looked quite similar to the Nabi and Nabi 2 (and even the Archos ChildPad), but at the time we didn’t pay much attention to the specific design resemblances.

    However, it now seems that Toys R Us blatantly copied the tab’s design from Fuhu, using other “trade secrets and confidential information to start selling Tabeo, which systematically attempts to replicate the Nabi experience.” That is of course allegedly, because Fuhu might have a very tough time in court backing all these accusations.

    The Nabi makers signed an agreement with Toys R Us back in October 2011, giving the retailer the exclusive selling rights for the first generation 7-inch tablet. According to the partnership, Toys R Us took it upon itself to order more than 100,000 Nabis, which were then to be heavily advertised by the retailer and sold by the end of holiday season.

    Instead, what allegedly happened was that Toys R Us did “virtually no promotion” or advertising effort, only ordering and selling 20,000 Nabi tablets. The exclusivity contract between the two companies was a few weeks after Christmas 2011 terminated, which left Fuhu with more than a couple of unanswered questions.

    Also allegedly, Toys R Us then began copying the “Nabi business plan, the tablet design and shared other NDA information with one or more of Fuhu’s competitors.” This is where things could get particularly tricky for Fuhu, because, even if it’s pretty easy to notice that the butterfly-shaped bumper designed to protect the Tabeo is identical to Nabi’s, the design was never patented by the company that used it the first.

    Another interesting point in Fuhu’s claims is that Toys R Us is accused of attempting to replicate the Nabi experience “far earlier than it could have done otherwise, if at all,” which makes us think that the children-focused US-based retailer might have had some clauses in that terminated contract allowing it to manufacture a tablet of its own at some point.

    Reuters tried to contact Toys R Us to get some sort of a reaction on the matter, but, according to a spokeswoman, the company cannot comment on the lawsuit just yet and will want to first take the time to review Fuhu’s accusations.

    Fuhu, on the other side, is expecting a speedy response from the federal court in San Diego, California, asking for starters that Toys R Us be banned from selling the Tabeo (currently up for pre-order and slated for an October 21 launch). Besides the sale restriction, Fuhu will also require monetary damages to cover for the 2011 losses caused by the limited release of the first gen Nabi, but also the turning over of all Tabeo units manufactured by Toys R Us at the moment.

    I don’t know what you think, but to me it sounds like the recent verdict in the Samsung vs Apple legal war is already causing what we all feared it will – the shift of competition from marketing campaigns and such to courts of law. Fuhu might or might not be a rightful claimant in this particular case (don’t forget that we are yet to hear Toys R Us’ side of the story), but educating the market on the alleged “design theft” and then letting it decide could have been a wiser decision. Do you agree?

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