Both companies have been ordered to work together to resolve the issue.
Toysrus.com sued Amazon.com in May, alleging that Amazon had violated the agreement between them. It stipulated that Toysrus.com would be the only authorised seller of toy, game and baby products on the Amazon.com platform.
On the strength of the agreement, signed in August 2000, Toysrus.com stopped selling products through its own web site and, according to a New York Times report, pays Amazon.com the sum of $50 million a year for the 10 year duration of the contract.
The lawsuit accused Amazon.com of breaching the exclusivity part of the deal. In early June it won an injunction, prohibiting Amazon.com from allowing other sellers to use the site for the sale of toys, games and baby products.
Amazon.com then filed its own lawsuit, asking the court to end the agreement and to award $750 million in damages because of, according to press reports, a "chronic failure" on the part of Toysrus.com to comply with the contract terms by failing to have sufficient products in stock, or to choose the top selling toys.
In July, Amazon.com went to court again, arguing that the injunction would prevent it launching a new graphical user interface service in September, designed to allow smaller retailers to advertise their own products on the Amazon site.
As a result, according to the Associated Press, Judge Margaret M McVeigh eased the injunction a little - allowing the launch to go ahead on the condition that users did not sell those products offered by Toysrus.com on an exclusive basis.
Judge McVeigh then added that in her opinion it was likely that Toysrus.com would be able to show that Amazon.com had breached the original contract.
The Associated Press reports that Toysrus.com has now asked the court to fine Amazon.com, arguing that it has breached both the June injunction and the July order by allowing its exclusive products to be advertised by other companies.
Toysrus.com backed its claim with evidence from a computer consultant who had managed to list six of the exclusively marketed items on the site, while pretending to be a small retailer.
In her ruling on Thursday, Judge McVeigh stated that she did not think the breaches so severe that she should award sanctions now, but she ruled that she would in future fine Amazon.com $1,000 for each product marketed in breach of the injunction. The on-line retailer was also ordered to pay costs.
The judge was concerned that the breaches showed that Amazon's technology was not going to be adequate to allow Amazon to comply with her rulings, and ordered both parties to work together to resolve matters.