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Mediation to decide who can sell Martha Stewart-branded products

A few people in Texas, and across the nation, may remember the announcement in December 2011 that J.C. Penney and Martha Stewart Living Omnimedia had struck a deal to bring Martha Stewart "mini-stores" to Penney locations. The deal would have meant huge revenue boosts for both companies in what appeared to be a win-win scenario.

But not so, claimed Macy's who says that the two companies are violating a previous agreement between Stewart's company and the competing retail chain. According to the 2006 agreement, Macy's had "an exclusive license to make and sell Martha Stewart-branded products in certain exclusive product categories." It's because of this contract dispute that all three companies have been locked in a legal debate for nearly a month since Macy's filed a lawsuit last February.

When arguments and testimony for the trial started three weeks ago, accusations quickly surfaced that MSLO had breached its contract. Macy's CEO Terry Lundgren even stated that he had always thought of Stewart as a friend and was hurt by her decision to help his competitor. MSLO fired back, however, stating that it didn't want to become any one store's "private brand."

Instead of tying the case up in court for an unknown amount of time, the judge overseeing the contract dispute has ordered the three parties into mediation and has since adjourned the case. It's a move that Macy's and MSLO are saying was a positive development and a move in the right direction. J.C. Penney has not commented on how it feels about the legal change though it does appear to be adhering to the injunction placed against it in July and has since ceased selling Martha Stewart products until the conclusion of the court case.

Source: CNN News, "Martha Stewart, J.C. Penney and Macy's ordered to mediation," Chris Isidore, Mar. 8, 2013

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