Judge declines to expand J.C. Penney block over Martha Stewart

A New York judge on Friday gave J.C. Penney Co Inc the go-ahead to sell home goods designed by Martha Stewart under a "JCP Everyday" label, pending the outcome of an ongoing trial.

Justice Jeffrey Oing, who last year blocked J.C. Penney from selling the goods under a Martha Stewart label, refused the request of Macy's Inc to expand the block.

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The ruling was an interim victory for embattled J.C. Penney, which has warehoused the disputed goods as it continues to battle Macy's over the right to sell them. A lawyer for Macy's said it would appeal the ruling.

Oing said he could not ignore the economic reality of the harm that an adverse ruling would have caused J.C. Penney "even if it is the result of their own acts." He said, "J.C. Penney has been a given a proverbial bye in this case."

The rulings came during a trial to decide whether Stewart's company, Martha Stewart Living Omnimedia Inc, breached its contract with Macy's when it entered into an agreement with J.C. Penney. Macy's sued both companies after they announced their deal in December 2011.

Macy's claims it has the exclusive right to sell Martha Stewart goods in such categories as bedding, bath, and tableware, under a 2006 agreement which runs to 2018.

On Monday, J.C. Penney ousted Ron Johnson, the CEO who negotiated the deal with Martha Stewart, and replaced him with his predecessor, Mike Ullman. The deal with Martha Stewart was a key component of Johnson's plan to re-invent the struggling retailer.

The cases are Macy's Inc v Martha Stewart Living Omnimedia Inc, 650197/2012, and Macy's Inc v J.C. Penney Corp, 652861/2012, New York State Supreme Court, New York County.