Macy’s and J.C. Penny’s are two staples in most shopping centers and a consumer is often left deciding to shop in one or the other…or both. Martha Stewart Living Omnimedia Inc.  (MSLO) seems to have recently faced a similar problem and its decision to go with both has created quite a stir.

Macy’s has recently sued MSLO for breach of contract accusing Martha Stewart of violating a deal to sell certain products exclusively to Macy’s. WWD says that “Penny’s bought a stake in the media and lifestyle brand last month, and plans to sell a wide range of Martha Stewart-branded products, starting in 2013.” All seems peachy as that comes right after Macy’s five-year deal with MSLO ends. However, Macy’s claims that on January 23, 2012, they exercised their “unilateral right” to extend the agreement meaning that it does not expire until 2018.

Macy’s is seeking a preliminary injunction to prevent any MSLO products from being sold in Penny’s stores. According to Ted Grossman, who represents Macy’s, “the reason why a person goes to Macy’s versus someplace else is because it’s the only place they can get it.” 
This is likely to explain why Macy’s has such a vested interest in the exclusivity of its MSLO products.

An aggressive newcomer, Ron Johnson, who led Apple’s retail efforts, is now leading Penny’s down a new path to “replace the 400 brands currently on its floors with 100 focused shop-in-shops and to continue to link up with brand names such as Martha Stewart and Nanette Lepore. This emphasis on having fewer, stronger brands puts Penney’s in more direct competition with Macy’s and its exclusive offerings from the likes of Tommy Hilfiger and Madonna.” Clearly part of Penny’s new vision includes selling items from the Martha Stewart line and the Martha Stewart brand seems to be on board.

J.C Penny’s counsel is relying on language in the agreement between Macy’s and Martha Stewart that says that Martha Stewart can sell goods in MSLO stores. It just so happens that Penny’s plans to create MSLO stores within its stores, which could mean that Martha Stewart has not violated the agreement with Macy’s.

As both sides prepare for what may be a long battle, it seems that there are good arguments from both sides making it hard to predict what the outcome will be.