Martha Stewart Living Omnimedia, Inc. (MSO), Macy’s, Inc. (M), and J.C. Penney Company, Inc. (JCP) Get in the Ring

On top of all the legalese, Stewart is planning on showing not only that her company has the right to sell in JCPenney, but that Macy’s was a bad steward of the Martha Stewart brand. In fact, it may not matter if the contract was violated by J.C. Penney, because Stewart’s lawyers plan to show that the contract was originally broken by Macy’s when it failed to “use commercially reasonable efforts to maximize net sales of Martha Stewart Collection products.”

The winners and losers
While I’m not a lawyer, I think J.C. Penney is probably going to win this one on a wording technicality. If there really is no stipulation saying that the Martha Stewart Living stores have to be stand-alone locations, then it seems like Stewart can open a location anywhere she darn well pleases, including in a JCPenney store. In some sense, JCPenney is turning into a mini-mall within a mall, and there’s no way that the Macy’s contract would preclude Stewart from opening a store in a regular mall, so it shouldn’t stop her from opening locations in a mini-mall.

The odder part is that I doubt the Macy’s-Stewart contract will end up having been violated by either side — which means that it would still stand. It seems unlikely that Stewart’s lawyers will be able to definitively show that Macy’s didn’t go to all reasonable lengths to promote Stewart’s merchandise. So we may find Macy’s and JCPenney locations competing to sell “exclusive” merchandise. At most, I imagine there may be some outcomes for advertising, and which company can use the term “exclusive.”

If all that turns out to be true, then I think everyone loses here. Neither company will have real exclusivity, and it seems unlikely that Macy’s is going to keep pumping Stewart products as hard as they could. But J.C. Penney isn’t going to be able to make broad claims about being the only place to buy Martha Stewart designs, so the value of the deal will be much smaller. It just goes to show you, small words are a big deal.

The article Martha, Macy’s, and Penney Get in the Ring originally appeared on Fool.com and is written by Andrew Marder.

Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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