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Retailers in court over Martha Stewart products

Macy's and J.C. Penney failed to agree to a settlement after a month of mediation, leaving the retailers to return to court regarding a dispute over the distribution of Martha Stewart home goods products. The two companies, which do business in Maryland, initially went to court in 2012 but were ordered into mediation during a recess.

Macy's commercial litigation accuses J.C. Penney of violating its exclusive deal with Martha Stewart by selling several of Stewart's home goods that were to be exclusive for their story only, per a previous contract. Macy's argues that Penney's Martha Stewart products are nearly identical to their own, pointing to a set of champagne flutes that it says "compete[s] directly" with its own. However, an attorney for Martha Stewart Living Omnimedia contends that those glasses are disposable plastic versions that are not intended to compete with the more expensive flutes available at Macy's. Martha Stewart is currently the top-ranking home goods brand at Macy's.

J.C. Penney started selling Martha Stewart products online to prepare for planned Martha Stewart boutiques in several of its physical locations, a move aimed at revamping the company and allowing it to attract a crucial demographic. Penney's sales dropped by 25 percent in 2012. The ongoing legal battle has reportedly been difficult for J.C. Penney, which agreed to abide by a preliminary order barring it from selling some of the products in question.

According to the lawsuit, Martha Stewart Living and Macy's agreed to a 2006 deal that gives the retailer the exclusive right to sell certain Martha Stewart home goods. The deal is set to expire in 2018. Macy's sued both Martha Stewart Living Omninational and J.C Penney over their own deal, asserting that it effectively breaches the previous deal. Martha Stewart has already testified in the case, as have J.C. Penney's CEO and a Macy's executive.

Source: Baltimore Sun, "Macy's Penney's go back to court over Martha Stewart," April 8, 2013

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