Trial Set for Macy's, JC Penney Battle Over Martha Stewart

Case Won't Be Tried Before Jury, No Damages Will Be Decided

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Macy's Inc.'s bid to prevent Martha Stewart Living Omnimedia Inc. from executing a sales agreement with J.C. Penney Co. is set to go to trial Feb. 19.

The case won't be tried before a jury and there will be no need to decide damages, Judge Jeffrey K. Oing said Thursday in New York state court in Manhattan.

Any potential damages in the dispute "are going to pale in comparison to the injunction," Mr. Oing said during a hearing. "That's the real big bucks there -- if I stop this deal."

Macy's , the second-biggest U.S. department-store chain, claims it has an exclusive right to sell Martha Stewart Living products in certain categories. The Cincinnati-based retailer sued both JC Penney and Martha Stewart Living seeking to halt their sales agreement, announced in December 2011.

In one of the suits, Macy's said Plano, Texas-based JC Penney, the No. 4 U.S. department-store chain, caused it to "incur substantial damages and threatens to inflict incalculable further harm" and that the Martha Stewart accord is "transparently designed to eliminate the competitive advantage that Macy's enjoys in the area of home products."

Mr. Oing in July granted Macy's request for an initial injunction blocking Martha Stewart Living from taking any steps under the deal on making, marketing, distributing or selling certain Martha Stewart-branded products. In August, he said he wouldn't impose a similar injunction against JC Penney because Macy's hadn't proved it was likely to succeed on some claims.

Martha Stewart Living filed a notice in August that it would appeal Mr. Oing's injunction order.

JC Penney announced in December 2011 that it was entering into a "strategic alliance" in which it was investing $38.5 million for a 16.6% stake in Martha Stewart Living. As a component of the deal, the companies planned to open distinct Martha Stewart home and lifestyle merchandise stores inside many JC Penney locations starting in February and sell specialty merchandise online, according to the announcement from JC Penney.

Martha Stewart Living, based in New York, "remains on track to launch products both in-store and online with JCPenney in the spring of 2013, as previously planned," Sarah Brown, a spokeswoman for Martha Stewart Living, said today in an email.

The case is Macy's Inc. v. J.C. Penney Corp., 652861/2012, New York State Supreme Court (Manhattan). The old case is Macy's Inc. v. Martha Stewart Living Omnimedia Inc., 650197/2012, New York state Supreme Court (Manhattan).

~Bloomberg News~

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