New Yorkers may see fewer Martha Stewart sheets and dinnerware in Macy's windows if the two companies cannot settle a manufacturing and marketing dispute. Macy's claims Martha Stewart Living Omnimedia Inc. has breached the contract that gave the department store the exclusive right to make and sell certain branded goods.

The department store filed suit when it learned that MSLO had signed a contract with J.C. Penney Co. Inc. to sell products in that company's stores. J.C. Penney's is a major competitor of Macy's.

Macy's and MSLO signed their contract in 2006. In a statement to the press, the store said the parties had recently renewed their agreement; Macy's will be the exclusive merchant for Martha Stewart products -- cookware, kitchen utensils, bed and bath -- until 2018. A statement from MSLO confirmed that Macy's intended "to feature and promote" the Martha Stewart Collection, adding that Martha Stewart is Macy's #1 home brand.

The statement from MSLO did not address the litigation, though. J.C. Penney did not respond to press inquiries.

Macy's is asking the New York state Supreme Court to grant an injunction that will stop MSLO from continuing to work with J.C. Penney. Generally, injunctions can be an effective way to encourage the allegedly breaching party to settle the matter quickly. For small businesses, an injunction can mean a full stop to all business activities.

Macy's also asked that the court seal the lawsuit and motion. The documents apparently include confidential information about the business arrangement between the two companies.

Source: ThomsonReuters News & Insight, "Macy's sues Martha Stewart Living," Karen Freifeld with additional reporting by Martinne G. Geller and Nivedita Bhattacharjee, Jan. 23, 2012