J.C. Penney Co. Inc. can breathe a sigh of relief after a panel of appeals court judges allowed the embattled retailer to continue selling unbranded home wares designed by Martha Stewart.

This story first appeared in the May 1, 2013 issue of WWD. Subscribe Today.

For Penney’s, Tuesday’s ruling allows the retailer to unload warehouses filled with Martha Stewart-designed goods marked with “double-house” or “JCP Everyday” logos.

This matter was up in front of the Appellate Division of New York Supreme Court, following the lower court’s decision to permit Penney’s to sell unbranded goods on April 12. New York Associate Appellate Court Judge Richard Andrias mimicked the lower court’s ruling, denying Macy’s Inc.’s request for a temporary restraining order, while noting, for instance, that Penney’s should not associate the unbranded goods with Martha Stewart via advertising.

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Macy’s, which faced off against Penney’s and Martha Stewart Living Omnimedia Inc. in a two-month breach of contract trial, had asked the lower court to broaden its preliminary injunction to extend to unbranded goods.

But presiding New York State Court Judge Jeffrey Oing denied Macy’s’ request to expand the injunction he put in place over the summer, which kept Penney’s from selling goods bearing Martha Stewart’s trademark.

The trial, which is adjourned, will officially wrap up with closing arguments that have yet to be scheduled.

Macy’s is seeking a permanent injunction that would keep Penney’s from selling just the branded goods, including wares like plastic cups and pitchers that are currently being sold by Penney’s under the “celebrations” category. In addition, Macy’s is seeking damages that will be deemed by the court.

“While we are disappointed that the Appellate Division declined on an emergency basis to expand the relief that we have already obtained from the trial court, we are very pleased that our original preliminary injunction, which bars the sale of Martha Stewart-labeled kitchen, bath and bed goods at J.C. Penney, and the trial court’s further order prohibiting Martha Stewart from promoting ‘JCP Everyday’ goods, remain very much in place,” a Macy’s spokesman said. “We look forward to our final and full relief at the conclusion of these proceedings.”

Both MSLO and Penney’s declined to comment.