J.C. Penney scores victory in dispute with Macy’s — for now

New York -- A New York State Supreme Court Judge ruled on Friday that J.C. Penney’s could temporarily sell certain housewares products from Martha Stewart Living in Penney stores. The ruling allows Penney to sell the product under the “JCP Everyday” label until a final decision comes at the end of the trial.

Macy's had requested that the Everyday products be added to the list of items Penney is prohibited from selling. Macy's claimed that the products were in violation of its exclusive contract with Martha Stewart Living Omnimedia — even if they don't carry the Martha Stewart brand logo.

The products impacted by the Friday ruling have already been produced, and are due to make their debut in Penney’s new in-store home shops beginning in May. If Macy’s had prevailed, it potentially could have cost Penney millions of dollars — up to $100 million according to some analysts — as it was forced to dump products. The retailer would also have been left with empty shelves.

The ruling seemed to reflect some sympathy by Judge Jeffery Oing sympathy for Penney, and his feeling that the retailer’s former CEO, Ron Johnson, had a lot to do with the mess that Penney is currently embroiled in with Macy’s. The judge also worried about the impact of not allowing Penney’s to sell the products in question.

“It’s not Ron Johnson that I’m enjoining,” he said, according to a New York Times report. “It’s a company and the company employs a lot of people.”

He went on to say: “What happens is that they lose the money, the money they’ve spent. Employees may be terminated.”

The judge however, warned Penney could still face costly damages if Macy's ultimately prevails in the case. The trail is set to resume this week.

Macy’s said it would appeal the decision.