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Macy's appeals ruling on Martha Stewart goods in Penney dispute

A man with a Macy's bag walks past the J.C. Penney's store in New York, April 11, 2013. REUTERS/Brendan McDermid
A man with a Macy's bag walks past the J.C. Penney's store in New York, April 11, 2013. REUTERS/Brendan McDermid

NEW YORK (Reuters) - Macy's Inc has filed an appeal challenging a judge's ruling that J.C. Penney Co Inc can sell unbranded Martha Stewart goods in its stores for now -- the latest salvo in a legal war between the two retailers over rights to the domestic doyenne's products.

Justice Jeffrey Oing in Manhattan state court said on Friday J.C. Penney could sell certain Martha Stewart-designed goods as long as they don't carry her name. The decision was a reprieve for the troubled retailer which has already had the products manufactured and is storing them in warehouses. An analyst has estimated the value of the goods at $100 million.

In Monday's court filing, Macy's said Oing "erred in several significant respects."

Macy's sued J.C. Penney and Stewart's company, Martha Stewart Living Omnimedia, in December 2011, after they announced a deal to launch Martha Stewart stores within J.C. Penney stores.

Macy's claimed it has the exclusive right to sell Martha Stewart goods in certain categories such as bedding, bath and tableware under a 2006 agreement that lasts through 2018.

Previously, Oing had barred J.C. Penney from selling the disputed goods under a Martha Stewart label. His ruling on Friday denied a request by Macy's to expand that ban to include products that would be branded "JCP Everyday."

Representatives of J.C. Penney and Martha Stewart Living Omnimedia did not respond to requests for comment outside regular U.S. business hours.

Oing is overseeing a trial to determine whether Macy's contract with Martha Stewart was breached. It resumed last week after a month-long break, during which attempts at mediation failed, and is scheduled to continue on Wednesday.

The battle has come at a trying time for the department stores, particularly for J.C. Penney, which ousted its chief executive Ron Johnson last week. On Monday, the department store giant said it had borrowed $850 million from its $1.85 billion revolving credit facility to help buy inventory as it revamps its strategy after a failed turnaround.

Johnson had signed the deal with Martha Stewart's company as a key part of his plan to reinvent J.C. Penney.

The cases are Macy's Inc v Martha Stewart Living Omnimedia Inc, 650197/2012, and Macy's Inc v J.C. Penney Corp, 652861/2012, New York State Supreme Court, New York County.

(Reporting by Joseph Ax; Additional reporting by Karen Freifeld; Editing by Paul Tait and Edwina Gibbs)

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