| NEW YORK, August 1
NEW YORK, August 1 A New York state judge could
decide as soon as Thursday whether J.C. Penney Co Inc
can sell certain Martha Stewart-branded home goods despite rival
Macy's Inc's exclusive deal with the doyenne of U.S. home
The two department store chains are scheduled to give
closing arguments Thursday morning, more than three months after
testimony ended in the non-jury trial before Justice Jeffrey
Oing in state Supreme Court in Manhattan. He could render his
verdict from the bench following summations or issue a decision
in coming days.
Macy's, which claims exclusive rights to Martha Stewart
cookware, bedding and bath products under a partnership first
signed in 2006, sued Martha Stewart Living Omnimedia Inc
and Penney last year over a deal announced in 2011 to open shops
within Penney stores that would carry Stewart-designed goods.
Oing will rule on whether Penney can sell Martha
Stewart-branded goods in categories claimed by Macy's. He also
will decide whether Penney can sell certain Stewart-designed
goods that do not bear her name.
The judge had pressed the companies to settle the dispute
and in March ordered them into a month-long mediation effort
that failed to yield an agreement.
The Penney plan was part of ex-CEO Ron Johnson's vision to
boost sales in the home goods section. Johnson departed after
disappointing results and current CEO Mike Ullman abandoned his
strategy, making the Martha Stewart shops within Penney less
integral to the chain's strategy.
During the trial, Oing denied a request by Macy's to stop
Penney from selling its existing inventory of home goods
designed by Stewart under the "JCP Everyday" label, but warned
that Macy's could be entitled to damages.
Penney and Stewart argued that the Macy's contract allows
Stewart to sell branded goods in Martha Stewart retail stores
and that the shops within Penney department stores would, in
fact, be Martha Stewart retail stores.
"And because the agreement has a very broad definition of
'MSLO Store,' the Martha Stewart Store inside JCP, as
contemplated in the partnership agreement between JCP and MSLO,
fit well within that definition," Penney's lawyers wrote in a
Macy's contended in its post-trial brief that Penney's
argument had been "crafted at the intersection between ingenuity
and gall." It also insisted that its contract gives it exclusive
rights over Stewart-designed goods in specific product
Steven Gursky, a branding and intellectual property lawyer
who has followed the case closely, said he expected Oing to rule
in Macy's favor, though he might allow Penney to sell its JCP
"I don't see how the judge comes down on the side of JCP or
Martha Stewart," he said. "They knew they were buying into a
risk, and the risk blew up in their faces."
The trial, which began in February, saw testimony from
Stewart as well as Johnson and Macy's CEO Terry Lundgren.
Stewart, whose court appearance drew major media attention,
testified that she was "flabbergasted" that Macy's objected to
her deal with Penney.