Martha Stewart and JCPenney are facing delays in their courtroom battle with Macy’s — spelling serious trouble for their spring home goods launch.
As their trial yesterday entered its third week, lawyers for Stewart and Penney have yet to make their case, while Macy’s legal team is still slated to call more witnesses this week, including Stewart herself.
Penney’s lead lawyer, Mark Epstein, told the court he doesn’t expect to finish his case by Friday. The court, meanwhile, won’t be able to reconvene until April 8 due to its own scheduling conflicts.
Macy’s lawyer Ted Grossman asked New York State Supreme Court Justice Jeffrey Oing to extend a preliminary injunction that has barred Penney from selling Martha Stewart merchandise. A hearing on that injunction is set for Friday.
Penney’s lawyer, Epstein, raised concerns that cargo ships laden with Martha Stewart products are already “on the ocean or in port.”
As a precaution, Penney has kept Martha Stewart’s name off most of the goods, including her products in key categories of bedding, bath and kitchen ware. Instead, most of the goods will be branded as “JCP Everyday.”
Lawyers for Macy’s have argued, however, that its own exclusive contract with Martha Stewart bars competitors from selling any goods designed by her, no matter whose name is on them.
“They’re going to ask that goods be yanked off the shelf?” Penney’s lawyer asked Justice Oing. “That’s a severe, severe remedy.”
The judge, appearing exasperated by the back-and-forth among the legal teams, vented about his dilemma, noting that the question of whether Penney has the right to sell non-Martha Stewart branded goods remains unresolved.
“Am I going to open up a can of worms, a Pandora’s box, by letting you put this stuff on the shelf?” Oing said.
A lawyer for Martha Stewart charged that claims by Macy’s have been “a moving target,” noting that lawyers for Macy’s didn’t specifically home in on the question of unbranded goods until late in the proceedings.
Macy’s lawyers submitted documents yesterday in which a senior Penney executive indicated that Penney was barred from using any designs from Martha Stewart, branded or unbranded.
“I warned you guys before we started this trail,” Oing told the lawyers, reminding them that he had urged them to settle their claims in order to avoid the current scenario. “That didn’t happen.”
The judge, who last week gave an ambiguous statement that he had already made his mind up about certain arguments in the trial, appeared to signal that he was leaning towards the Macy’s argument on non-branded Martha Stewart goods.
“I’m gonna’ keep an open mind here,”Oing said.
“But the risk is on that side of the aisle, not this side, ” he said, indicating that Penney and Martha Stewart were on the risky side.
In earlier testimony yesterday, Penney CEO Ron Johnson was grilled by lawyers who accused him of trying to hurt Macy’s by stealing away Martha Stewart.
In response, Johnson argued that he didn’t necessarily think his deal with Martha Stewart would harm Macy’s.
“Would the exclusive right to market Apple be valuable?” Macy’s attorney Grossman asked Johnson to make his point.
“It’s not a yes-or-no question” Johnson replied. “I would say, it depends.”
Under further questioning, Johnson acknowledged he thought AT&T’s contract to be the service provider for the iPhone was less valuable after Verizon also won similar rights to sell iPhones.