Macy’s Request to Block JCP-Martha Stewart Deal Will Be Denied

Sep 01, 2012 2:00 AM  By

A New York Supreme Court judge said he will deny Macy’s request to block its rival, J.C. Penney, from selling home goods from a Martha Stewart line in its stores according to Reuters.

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According to the lawsuit, which was obtained by Macy’s spokesperson Jim Sluzewski last month, Macy’s and Martha Stewart Living Omnimedia made a business deal back in 2006 which granted Macy’s an exclusive license to manufacture and sell certain Martha Stewart products.

That agreement prohibited MSLO from entering into any other agreement with any third party retailer. However, in December of 2011 JCP and MSLO issued a statement announcing that the two had entered into a strategic alliance” with each other.

Soon after the announcement, Macy’s filed a lawsuit against JCP over who holds exclusive rights to sell certain Martha Stewart Living products. Macy’s claimed in the suit that alliance was a violation of its original agreement with MSLO.

According to the Reuters report, New York State Supreme Court Justice Jeffrey Oing said “its one thing to enjoin MSLO because that company is the centerpiece of these actions…It’s another thing to enjoin a retail company from doing business. We live in a free-market society.”

But Theodore Grossman, an attorney who is representing Macy’s “argued that the retailer will suffer irreparable harm if J.C. Penney is allowed to continue working under the contract with Martha Stewart Living,” according to Bloomberg.com.

“Macy’s made a huge investment and took a huge risk in investing in Martha Stewart when it did,” Grossman said in the Bloomberg.com piece.

“Think of the Genius Bar at Apple stores,” Grossman was quoted in the article, “That’s what they’re trying to create, a Martha Stewart bar at J.C. Penney.”

J.C. Penney’s lawyer, Mark Epstein, according to Reuters, told the judges that the contract with Macy’s “only covers products that carry the Martha Stewart mark. Items that are designed by Martha Stewart but do not bear her brand are fair game, including products within Macy’s exclusive categories.”

In a statement to Reuters, Macy’s said the ruling will not affect its agreement with Martha Stewart Living. “J.C. Penney has agreed that it won’t sell Martha Stewart-branded merchandise in our exclusive categories as long as the MSLO injunction is in effect.”

Macy’s also said in the statement to Reuters that it expects to “continue to exclusively sell Martha Stewart-branded merchandise” in certain home categories until the terms of its contract with Stewart which expires in 2018.