On February 20, 2013, department stores J.C. Penney Inc. and Macy’s Inc. faced off in a new arena – a New YorkState courtroom. The two retailers are going to trial over Martha Stewart. Macy’s suit accuses J.C. Penney of attempting to convince Martha Stewart to break her company’s exclusive merchandise contract with the department store chain – a contract Macy’s says gives them the exclusive rights to sell certain Martha Stewart products until 2018. Part of Macy’s lawsuit reads: “J.C. Penney want[s] 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).”
J.C. Penney argues that Macy’s rights to the Martha Stewart merchandise are not nearly as broad as Macy’s claims. According to J.C. Penney: “Macy’s should stop competing in the courtroom and start competing in the marketplace.”
The move to market the Martha Stewart line is one of several initiatives by J.C. Penney to revive its struggling business. As part of its new plan, J.C. Penney acquired a 16.6% stake in Martha Stewart’s company in December of 2011, subsequently announcing its plan to open up Martha Stewart ‘mini shops’ in most of its stores. In response, Macy’s immediately sued J.C. Penney and was granted a preliminary injunction prevent the sale of the Martha Stewart goods at J.C. Penney while the trial played out.
A central issue of the case is whether or not the court agrees that the mini-shops fall under the exclusivity clause of the Macy’s/Stewart agreement.
Macy’s, J.C. Penney go to court over Martha Stewart