NEW YORK (AP) — Let the pots and pans fly. Two of the nation's biggest department stores — J.C. Penney and Macy's — are expected to duke it out in New York State Supreme Court over the right to sell Martha Stewart merchandise. At the heart of the case, slated to begin Wednesday, is whether Macy's has the exclusive right to sell certain Martha Stewart products like some of its cookware, bedding, and bath items. Company founder Martha Stewart, J.C. Penney's CEO Ron Johnson and Macy's CEO Terry J. Lundgren could be called to testify during the trial, which could last three weeks. In December 2011, J.C. Penney announced a partnership in which it would open Martha Stewart mini shops in most of its stores, beginning this spring. It also announced that it had acquired a 16.6 percent stake in Martha Stewart Living. The deal is part of J.C. Penney's plan to revive the struggling department store under Johnson's leadership. Macy's sued Martha Stewart Living almost immediately, saying that it had exclusive rights on certain of its products until 2018. The pact goes back to 2007. "J.C. Penney wanted to rob Macy's of market share and destroy the competitive advantage that it enjoys as a result of its existing exclusive agreement with (Martha Stewart Living)," Macy's said in its lawsuit. Macy's, based in Cincinnati, Ohio, has claimed substantial damages and said the maneuver by J.C. Penney "threatens to inflict incalculable further harm on Macy's. Billions of dollars of sales are involved." Macy's is also trying to stop Martha Stewart from providing designs to J.C. Penney even if it gets rid of the Martha Stewart moniker. Last summer, Macy's won a preliminary injunction against Martha Stewart Living that would prevent it from selling housewares and other exclusive products at J.C. Penney. Supreme State Court Judge Jeffrey Oing did grant the retailer permission to open Martha Stewart shops, as long as the items under the exclusive contract with Macy's are not sold in them. J.C. Penney plans to open the Martha Stewart shops on May 1. One of the big issues is whether the shops meet a stipulation that allows the home maven to sell goods in Martha Stewart Living stores. And because, according to Martha Stewart, the Macy's agreement doesn't say that goods under dispute can be sold only in "stand-alone" Martha Stewart stores, the mini shops in J.C. Penney stores do not fall under the exclusivity clause. Macy's disagrees. According to a memo filed by J.C. Penney, Macy's rights to Martha Stewart aren't nearly as sweeping as it suggests. Under Macy's interpretation of the contract, according to J.C. Penney, Martha Stewart Living is "little more than an in-house designer for Macy's." "Macy's should stop competing in the courtroom and start competing in the marketplace," the company said in its memo. In court documents, Martha Stewart Living said it will prove that it was Macy's Inc. that breached the contract because it didn't "use commercially reasonable efforts to maximize net sales of Martha Stewart Collection products." Continued... |