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Legal Matters
9 Months Ended
Sep. 30, 2013
Commitments and Contingencies Disclosure [Abstract]  
Legal Matters
Legal Matters
On January 23, 2012, Macy's Inc. and Macy's Merchandising Group, Inc. ( collectively, "Macy's") filed a lawsuit against the Company in the Supreme Court of the State of New York, County of New York titled Macy's, Inc. and Macy's Merchandising Group, Inc. v. Martha Stewart Living Omnimedia, Inc. In such lawsuit, Macy's claims that the Company's planned activities under the Company's commercial agreement with J.C. Penney Corporation, Inc. ("J.C. Penney") materially breach the agreement between the Company and Macy's Merchandising Group, Inc. dated April 3, 2006 (the "Agreement"). Macy's seeks a declaratory judgment, preliminary and permanent injunctive relief, and incidental and other damages. The Court entered a preliminary injunction on July 31, 2012 which limited the Company's activities with J.C. Penney in certain respects. In November 2012, Macy's amended its complaint to assert a second claim which alleges additional breaches of the Agreement. In January 2013, the lawsuit was consolidated with an action titled Macy's Inc. and Macy's Merchandising Group, Inc. v. J.C. Penney Corporation, Inc. The trial of the consolidated cases began on February 20, 2013. During a break in the trial in March 2013, the Court ordered mediation among the parties. The mediation did not result in a settlement and the trial resumed on April 7, 2013. On April 10 and 11, 2013, the Court dismissed the portions of the claim regarding confidentiality and disgorgement of profits, but did not dismiss the portion of Macy's claim that the Company is prohibited from designing for third parties in certain product categories.
On April 12, 2013, the Court denied Macy's request to expand the existing preliminary injunction against J.C. Penney and the Company. Macy's filed an appeal of that denial, as well as an appeal of the Court's decisions on April 10 and 11, 2013. On April 30, 2013, the New York State Supreme Court's Appellate Division, First Department, denied Macy's request for a preliminary injunction blocking the sale of goods at J.C. Penney. Closing arguments in the underlying case were heard on August 1, 2013. The Company believes that it has meritorious defenses to the claims made by Macy's, and the Company is vigorously defending such claims. Litigation costs in this matter are significant.
As set forth in Note 12, Subsequent Events, below, on October 21, 2013, the Company entered into a revised agreement with J.C. Penney.
The Company is also party to legal proceedings in the ordinary course of business, including product liability claims for which the Company is indemnified by its licensees. Other than the Macy's proceedings, none of these proceedings is deemed material.