"All I have is this fax that makes an offer basically asking us to cede control over the etoy art project, and in return they'll try to stop beating us up," Truax told Wired News. "That's not acceptable."

"EToys is willing to drop the lawsuit if etoy corporation allows eToys some control over the content of the etoy site. It appears eToys wants etoy to move anything they might consider offensive to some other Web site," Truax said. "In other words, they want some control over what the etoy art media group does, and that's unacceptable. These are artists. I don't think eToys would want to let etoy control the toys they sell on their Web site."

But Ken Ross, eToys' vice president of communications, vehemently denied that there was any kind of conditional demand that etoy move potentially disturbing material to a separate Web site.

"The request to move some of the material to alternate sites is just that, a request," he said. "This is a simple, straightforward, good-faith effort on our part to resolve this matter. We are asking that they make good-faith efforts to put some of the material that kids and parents might find offensive on another part of the site."

Ross said eToys would like to see the situation return to where it stood before eToys sued etoy for "trademark infringement, trademark dilution and unfair competition" and won a preliminary injunction in Los Angeles Superior Court on 29 November.

"We'll take all necessary steps to allow etoy to re-establish the etoy.com site," he said. "We're contacting [Truax] with a proposal that both parties drop their claims against each other. That would result in the dismissal against the preliminary injunction that was issued a few weeks ago.

"Over the last few weeks, we've received many emails and letters from members of the arts community [and] members of the Internet community, and they have overwhelmingly urged us to find a way to co-exist with the etoy group. We've listened very carefully to these opinions, and we're doing our part by initiating an end to the legal action."

Zai, the main spokesman for the etoy group in Zurich, said he and the other etoy "agents" had heard press reports about eToys' offer, but that Truax had urged him not to comment until the matter had been cleared up.

Asked if Zai and the others were popping champagne corks over what sounded like good news for etoy, Truax said: "Not until I tell them to."

"Their reaction in Zurich is they are puzzled. They've been getting contradictory reports as well. I try to never attribute to malice what can be attributed to ignorance. Maybe eToys is learning something. Maybe they are becoming aware of some cultural issues that they didn't understand before," Truax said.

"To me, it really gets back to the issue of respect. EToys needs to respect what etoy is doing even if they don't get it. Etoy is creating good, socially relevant art. Suing etoy and trying to take away their brand is like suing Leonardo da Vinci and trying to take away the Mona Lisa."

It may take weeks to clear up the legal mess. Truax just took over the case a week ago, which led to the continuance of a hearing set for last Monday.

"I'm getting conflicting symbols," he said. "If eToys is willing to just drop the lawsuit without any preconditions, then that would be an important step toward resolving this lawsuit."

But Truax dropped several hints that more legal action might be taken -- this time, with the toy giant being sued by the artists.