Days before a judge was expected to rule in the long-running legal dispute between Macy’s and J.C. Penney over the right to sell branded Martha Stewart housewares, Martha Stewart Living Omnimedia and J.C. Penney scaled back the merchandising agreement at the center of the battle.
Under the revised agreement, J.C. Penney will not sell kitchen, bed and bath products designed by Martha Stewart that were sold under the label JCP Everyday.
But it will continue to market other Martha Stewart merchandise, including window treatments, lighting and rugs under the label MarthaHome. Penney’s will also return 11 million common shares that it acquired in the initial agreement and it will give up its two seats on the Martha Stewart board, according to the terms announced this week.
Macy’s, which had sued both J.C. Penney and Martha Stewart charging that they breached an exclusivity agreement that Macy’s had with Martha Stewart covering all kitchen, bed and bath merchandise, declared immediate victory.
“It was a complete surrender,” Theodore M. Grossman of the Jones Day law firm, the lead counsel for Macy’s in the case, said after the agreement was announced. “Total victory.”
The agreement came after months of a trial before Judge Jeffrey K. Oing, of New York’s Supreme Court, who recently urged the parties to resolve their dispute and set a deadline of Friday for a possible ruling.
The effect on the two other companies, both of which have been struggling, was less clear. Macy’s has said in the past that the Stewart line was a best-seller in home goods, although some of her other ventures — like the Martha Stewart Living magazine — have declined.
J.C. Penney declined to comment on limiting the agreement with Stewart’s company, beyond a statement released from CEO Myron E. Ullman III.
“We are happy to be moving forward and continuing to provide our customers with quality products from the MarthaHome collection, which includes MarthaWindow, one of our best-selling lines of window treatments.”