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Court Prevents Martha Stewart Living from Selling Products at J.C. Penney

In January of this year, Macy's Inc. sued Martha Stewart Living Omnimedia Inc., claiming the company violated the terms of its agreement with Macy's when it agreed to sell its products at J.C. Penney, a competitor. A hearing on the breach of contract claim has now been heard, and Macy's has come out on top.

The lawsuit arose after an agreement between Martha Stewart Living and J.C. Penney was reported in December 2011. Macy's quickly initiated the litigation, and filed a motion to prevent J.C. Penney from carrying Martha Stewart Living products.

A judge at the New York State Supreme Court recently granted Macy's motion, barring J.C. Penney from "making, marketing, distributing or selling" specific Martha Stewart Living products.

Macy's asserts in its lawsuit that it has an exclusive agreement with Martha Stewart Living to sell products in specific categories, such as bedroom, bathroom and kitchen goods. The agreement between the two companies reportedly was established in 2006. According to Crain's New York Business, the contract between Martha Stewart Living and Macy's is not set to expire until 2018.

The judge found that Macy's had shown the agreement with J.C. Penney would cause "irreparable harm" to Macy's, if the products were allowed on the shelves at J.C. Penney stores.

The judge's order does not put an end to this contentious lawsuit. Rather, it temporarily prevents J.C. Penney from selling the products while the litigation continues.

In the wake of the judge's order, share prices for both Martha Stewart Living and J.C. Penney fell. Conversely, Macy's stock rose thereafter, according to the Huffington Post.

Source: Bloomberg, "Macy's Wins Bid For Court Order In Martha Stewart Lawsuit," Chris Dolmetsch, July 13, 2012.

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