WWD.com/business-news/legal/key-days-ahead-in-marthamacys-trial-6886880/
government-trade
government-trade

Key Days Ahead in Martha, Macy’s Case

Lawyers for Macy’s on Tuesday pressed Judge Jeffrey Oing to decide whether J.C. Penney could continue selling some Martha Stewart-branded goods on its Web site.

NEW YORK — With the question of the preliminary injunction hanging overhead, lawyers for Macy’s Inc. on Tuesday pressed Judge Jeffrey Oing to decide whether rival J.C. Penney Co. Inc. could continue selling plastic glasses, vases and other Martha Stewart-branded goods on its Web site.

The issue, which was brought up Monday, concerned whether certain items that Macy’s realized Penney’s had been selling violated the judge’s injunction issued over the summer. Macy’s argued that the items fell into exclusive categories.

RELATED STORY: Ullman Retakes Reins at J.C. Penney >>

On Tuesday, Macy’s pushed the judge for a ruling on the matter, which ultimately would provide some insight into whether he would broaden the injunction to include stopping the sale of any product designed by Stewart that was re-branded with the “JCP Everyday” and “double-house” logo. If that happens, Penney’s would not be able to sell any of the product it made in the Stewart deal — and that would be extremely damaging to the ailing retailer.

Holding up two similar looking Stewart-branded plastic vases that were for sale at both department stores, the judge declined to render a decision on the spot, even though he had promised to do so a day earlier.

“I’ve teed this up for the preliminary injunction [hearing] Thursday,” the New York State Court judge said. “Without disclosing where I’m going, I’d like to hold my cards close to the vest.”

The judge, who said he preferred to wait until after Macy’s rests its case today, did hint as to where he might be going with the injunction. He said that if he finds the products to be in violation of his initial injunction, the court could “figure out some monetary damages to give to Macy’s” as compensation.

It was revealed through the quick testimony of Pamela Hunter, Penney’s vice president of international sourcing, that her employer does have “contingency plans” in place should the judge broaden the injunction. Hunter’s lawyers kept her from elaborating on those plans.

The judge also addressed a Business Insider story that was published Monday. The story purported to have spoken with sources who had knowledge of the mediation efforts between Macy’s and Martha Stewart Living Omnimedia Inc., which took place during the trial’s one-month recess.

Although the story claimed that Macy’s had a vendetta against recently ousted Penney’s chief executive officer Ron Johnson and that the retailer declined to play ball during the talks, the judge said that after speaking with the chancellor in the mediation, he was “not concerned about inappropriate behavior.”

In the afternoon, Katheryn Burchett, Penney’s senior vice president of merchandising and marketing integration, took the stand. Burchett admitted that she “knew there would be risks of litigation,” as Penney’s structured its deal with Martha Stewart Living Omnimedia, primarily due to the “store-within-a-store” concept, or definition of what constitutes a store.

As part of her job, Burchett helped structure the language in the Penney’s-MSLO contract to reflect the definition of a store, explaining that she used Penney’s’ relationship with Sephora as a guide. Sephora has shops-in-shop in Penney’s. Burchett’s testimony continues this morning.

Today, Macy’s will rest its case and Martha Stewart’s team will argue for many of Macy’s claims to be dismissed. On Thursday, Oing will hear preliminary injunction arguments and render a decision soon after.