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Penney gets temporary go-ahead to sell some Martha Stewart-designed items

NEW YORK — J.C. Penney Co. can sell some home goods designed by Martha Stewart that were destined for shelves in May — for now, a New York State Supreme Court judge ruled Friday.

Rival department store chain Macy's had sought to temporarily block Penney from selling products designed by Martha Stewart under the name JCP Everyday. Macy's argued that the products violate its exclusive contract with Martha Stewart Living Omnimedia — even if they don't carry the moniker.

Friday's ruling lets Penney sell the JCP Everyday goods, until a lawsuit that Macy's is waging against Penney and Martha Stewart Living is fully decided. Macy's said in a statement that it plans to appeal the ruling.

Judge Jeffrey Oing also cautioned that the ruling is preliminary and Penney could still face costly damages if Macy's prevails in the case.

"This decision has not been very easy to make," said Oing, who heard arguments from both sides for nearly three hours before he made his ruling.

The two retailers are locked in a court battle over a partnership with Martha Stewart. Macy's, headquartered in Cincinnati, is suing Martha Stewart for breaching a long-standing exclusive contract that it had with the New York merchandising and media company in certain goods like bedding and bath items when it made a deal in late 2011 with Penney to open Martha Stewart mini-shops in the stores. The Martha Stewart shops, which have now been shelved, were planned for this spring. It also sued Penney for having no regard for the contract.

A temporary order made last summer still bars Penney from selling Martha Stewart-branded goods in the exclusive product categories. But Macy's had argued that selling the JCP Everyday goods, which included items covered by the contract, would confuse customers and create harm to Macy's. Macy's attorneys also argued that the new JCP Everyday brand, which carries a double house logo that resembles the letter "M," would give shoppers the idea that the merchandise was from Martha Stewart.

Oing said Friday that Macy's didn't prove irreparable harm. Macy's may face some financial pressure but "it's not like a building torn down," he said.

However, he warned Penney lawyers to stay away from using the Martha Stewart name in advertising or marketing when it comes to the products covered by the contract.

"You are to stay away from the Martha Stewart brand and label at all costs," he warned.

Penney could face a $100 million hit if it had to liquidate the JCP Everyday inventory that it already purchased, according to Deborah Weinswig, an analyst at Citi Research.

Penney is going ahead and adding Martha Celebrations areas, which will feature party accessories and stationery designed by the home maven. Those items are not covered by Macy's exclusive contract, though Macy's attorneys argued this week that some items like plastic pitchers violate the exclusive contract.

Penney gets temporary go-ahead to sell some Martha Stewart-designed items 04/12/13 [Last modified: Friday, April 12, 2013 9:15pm]

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