Could One J.C. Penney Problem Be Close to Resolution?

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Source: http://www.flickr.com/photos/idovermani/After more than a year of waiting, J.C. Penney (NYSE:JCP) is expected to learn whether it can began selling certain Martha Stewart-branded home goods that it has been prevented from stocking because of a lawsuit with rival retailer Macy’s (NYSE:M). As Macy’s attorney Theodore Grossman told Reuters Monday, closing arguments have been scheduled for August 1.

Last year, Macy’s sued both J.C. Penney and Martha Stewart Living Omnimedia (NYSE:MSO), alleging that J.C. Penney’s December 2011 deal to create a home goods boutique with Martha Stewart violated its exclusive right to sell Martha Stewart Living products. Justice Jeffrey Oing even blocked J.C. Penney from selling items like bath towels and tableware under the Martha Stewart label, but he refused to expand the injunction Macy’s had requested. The judge allowed the retailer to sell its existing inventory of Martha Stewart products marked “JCP Everyday” label, ruling that he could not ignore the economic harm such a ruling would have caused. Still, Macy’s could be entitled to damages depending on the outcome of the case.

The verdict will determine whether J.C. Penney can sell certain Martha Stewart-designed home goods without using her label.

In April,  the courtroom battle came down to a simple plastic pitcher. Macy’s lawyer Michael Platt set two plastic pitchers on the bench in front of Oing, urging the judge to pick up both pitchers. “They are both made of plastic,” he stated. “They both weigh about the same.” But one pitcher was from Macy’s Martha Stewart Collection, he said, and the other was from J.C Penney’s label, Martha Stewart Celebrations. Platt launched the demonstration with the aim of having Oing order J.C. Penney to remove the pitcher from its shelves even though the item was not marked with the Martha Stewart Living label.

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