J.C. Penney can go ahead with plans to sell Martha Stewart goods

New York -- New York State Supreme Court Justice Jeffrey Oing on Thursday denied Macy's Inc.’s attempt to block J.C. Penney Co. from proceeding with plans to sell a number of Martha Stewart Living Omnimedia home goods products in its stores.



In January, Macy’s sued Martha Stewart Living to stop it from executing a sales agreement with J.C. Penney. Macy’s claimed it had the exclusive right to sell Martha Stewart products in certain categories, including bedding and cookware.

In July, Oing granted Macy’s a preliminary injunction blocking Martha Stewart Living from taking any steps under its agreement with J.C. Penney on branded products in the exclusive product categories.



Macy’s this month filed a separate suit against J.C. Penney, seeking to block it from taking any steps under the pact.



In the recent ruling, Oin said he was unconvinced that Macy's had shown a likelihood of success in its separate claim against J.C. Penney.



The judge acknowledged that the latest ruling could put him in an "awkward situation" after having issued the injunction last month. He said he stood by his earlier decision, but expressed reservation about restricting a major retailer's ability to conduct business, according to Reuters.



"It's one thing to enjoin MSLO because that company is the centerpiece of these actions," he said. "It's another thing to enjoin a retail company from doing business. We live in a free-market society."



J.C. Penney announced the Martha Stewart deal in December. It is a centerpiece of its plan to carve its 1,100 stores into separate boutiques and part of J.C. Penney Chief Executive Ron Johnson's efforts to reverse market share loss.

J.C. Penney and Martha Stewart Living have said they will abide by the July injunction's restrictions but still plan to proceed with their broader agreement.



J.C. Penney's lawyer, Mark Epstein, told Oing the Macy's contract 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, he argued.