J.C. Penney Moves Forward with Martha Stewart Rollout Despite Macy's Lawsuit

April 8, 2013 — -- Court proceedings for Macy's lawsuit against J.C. Penney Co. and Martha Stewart continued Monday in Manhattan after the companies failed to reach a settlement.

Judge Jeffrey Oing ordered the parties involved, including Macy's, J.C. Penney Co. and Martha Stewart Living Omnimedia, into mediation while the trial was on a one-month recess. The trial began in early March.

Macy's accused J.C. Penney of selling Martha Stewart products online in violation of its exclusive deal with Macy's. J.C. Penney already launched some designer "shops" last week, including those of Jonathan Adler and Michael Graves. The company plans to open Martha Stewart shops by Mother's Day, CNBC reported.

J.C. Penney did not return a request for comment. A spokesman for Macy's said testimony was continuing on Monday and it's "impossible to say what will happen."

Martha Stewart, 71, testified on March 5, saying she believes her company was permitted to sell products with her name in places besides Macy's.

"There were categories that were non-exclusive to Macy's that we could sell in other department stores," she said in court last month.

J.C. Penney Co. CEO Ron Johnson and Macy's Chief Executive Terry Lundgren have also testified.

Read more: Martha Stewart Testifies in Manhattan Court

Macy's insists it has exclusive rights to Stewart's line of linens and other home items and is suing to block J.C. Penney from selling similar products.

On Monday, an attorney for Macy's told the court that a set of MarthaCelebrations champagne flutes on sale on J.C. Penney's website competes with similar Macy's products.

"The basic shapes and designs are the same," said Macy's lawyer Ted Grossman. "They compete directly against each other."

Martha Stewart Living has argued its contract with Macy's allowed it to sell Martha Stewart branded products that were in exclusive categories if they were sold within MSLO stores in J.C. Penney.