Retail giants to battle in court over proprietary information


As New Jersey business owners can attest, it is tough to keep up with the competition. Popular retailer Macy's experienced firsthand that the retail industry can be extremely competitive. The retailer claims that rival J.C. Penney demanded and received Macy's proprietary information from Martha Stewart Living Omnimedia Inc.

Macy's has the exclusive right to sell various products from Martha Stewart. However, in the summer of 2012, Martha Stewart Living made a deal with J.C. Penney to create in-store shops with the merchandise. J.C. Penney also bought a 16.6 percent share in the company.

Macy's is now filing a lawsuit against the two companies, claiming that it uncovered evidence showing correspondence between the companies. The correspondence included J.C. Penney demanding that Martha Stewart Living provide them with Macy's confidential information. Martha Stewart Living allegedly obliged and gave J.C. Penney the information they requested.

Macy's pretrial memo was filed on Feb. 4. The trial is slated to begin Feb. 20 in New York state court.

When a company hires a new employee or takes on a contract with another company, the parties must often agree to sign a non-disclosure agreement. This agreement helps protect the company's trade secrets by allowing the company to sue for confidentiality breaches. This is because unauthorized disclosure of proprietary information can hurt a company financially and even bring on the threat of litigation.

In a case like the one above, a company in Martha Stewart Living's position could create a conflict of interest by involving itself with two rival companies. In addition, proprietary information, such as the type that J.C. Penney demanded from Martha Stewart Living, is usually covered by a non-disclosure agreement.

Source: Business Courier, " Macy's claims J.C. Penney 'demanded' proprietary info from Martha Stewart Living," Feb. 5, 2013