NEW YORK, July 13 (Reuters) - A state judge on Friday
temporarily blocked plans by Martha Stewart Living Omnimedia to
sell certain branded products at J.C. Penney stores.
The preliminary injunction was a win for Macy's, which has
sued Martha Stewart Living claiming it has exclusive rights to
sell certain Martha Stewart products including soft furnishings,
dinnerware and cookware.
In issuing the preliminary injunction, New York StateSupreme Court Justice Jeffrey Oing said Macy's had shown
likelihood of ultimate success in its lawsuit. "The scale tilts
in favor of Macy's," the judge said.
J.C. Penney in December announced plans to open shops within
its stores to sell Martha Stewart-branded goods, starting in
2013. Macy's sued Martha Stewart Living, accusing it of breach
of contract by entering into the agreement with J.C. Penney.
Macy's claims Martha Stewart Living granted it the exclusive
right to manufacture and sell the Martha Stewart-branded goods
in Macy's lines under a 2006 agreement that, with a renewal,
runs until 2018.
Justice Oing said putting Martha Stewart products at J.C.
Penney stores would deprive Macy's of its competitive edge. He
also noted that Macy's had helped resurrect Martha Stewart
Living's image after its eponymous founder was found guilty in
2004 of lying about a stock sale.
"Macy's took on the risk with MSLO after Martha Stewart left
prison," he said.
Martha Stewart, 70, who during the scandal resigned from the
company she founded, was named chief creative officer this week,
less than two months after she became non-executive chairman.
Martha Stewart Living said it will comply with the
restrictions but still planned to go ahead with its deal with
J.C. Penney in the first quarter of next year. "Nothing about
today's ruling changes that," the company said in an emailed
The company also said it would keep defending its position.
"We continue to believe that we have not breached our agreement"
with Macy's, the company said. The parties are due back in court
A spokesman for Macy's, Jim Sluzewski, said the retailer
expected to continue to sell the Martha Stewart-branded
merchandise exclusively for the full term of its contract.
A spokeswoman for J.C. Penney declined to comment.
The Martha Stewart deal is a centerpiece of J.C. Penney's
plan to carve its 1,100 department stores into separate
boutiques, each housing a distinct brand, by 2015. The concept
is a key component of Chief Executive Ron Johnson's strategy for
J.C. Penney, which has lost market share in recent years.
Earlier this week, Penney and Martha Stewart agreed to broaden
the array of merchandise the stores would sell.
The case is Macy's Inc. v. Martha Stewart Living Omnimedia,
Inc., 650197/2012, New York state Supreme Court (Manhattan).
For Macy's: Theodore Grossman of Jones Day.
For Martha Stewart Living Omnimedia: Eric Seiler of Friedman
Kaplan Seiler and Adelman.
(Reporting by Karen Freifeld; Additional reporting by Phil
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