What Makes Martha Stewart Such a Bad Partner?

Stephen Reily

March 21, 2013

I’ve read lots of articles about Martha Stewart’s recent bout of litigation, but none of them addresses why someone would have ended up litigating this case to begin with, and what Martha (and her partners) could have done to avoid it.

The Third Marriage a Charm?

As a lawyer, I don’t find the claims underlying the Martha’s/Macy’s legal dispute very intriguing; it’s a pretty standard contract claim, with a pretty glaring breach.  In 2007 Martha’s company (MSLO) granted Macy’s the exclusive rights to lots of housewares product categories, but reserved the right for Martha to open her own branded stores.  Martha argues that this clause allows her to open a “store-within-a-store” at JC Penney’s – even when the store has no walls and is stocked staffed by Penney as MSLO’s licensee.  Her defense was weak enough that the parties are discussing settlement out-of-court.

What intrigues me is how this case and the underlying dispute ever came to be.

At IMC, what we negotiate are license agreements, but what we develop and manage are partnerships.  There is no sustainable value in a brand license unless both parties treat each other as partners.

This is not how Martha Stewart treated Macy’s.

To put this story in context, we should remember how Martha ended up with Macy’s to begin with.  Starting in the late 1990s, Martha Stewart licensed her name and design sensibility to Kmart.  Martha moved her brand “from class to mass” and got very well paid for it.  At its peak, Kmart was paying MSLO $65 million per year and selling more than $800 million in Martha-branded merchandise.

But Martha wanted more, and – while still under contract to Kmart, which she had sued in yet another lawsuit – she found another suitor.  Not long after Martha’s release from prison, Macy’s took on her brand, and started selling Martha-branded housewares even before her partnership with Kmart had expired.

Four years later Martha again wanted more, and found herself talking to Penney’s CEO (Apple Store-genius Ron Johnson).  Johnson wanted some of Martha’s class for his own housewares department, but he knew that her partnership with Macy’s was a problem.  MSLO then told Johnson that its lawyers found a loophole in their agreement with Macy’s: he could sell Martha merchandise through a store-within-a-store.  And as soon as Johnson announced his deal with Martha (which included Penney’s buying a substantial minority stake in MSLO), Macy’s sued.

What Partnership Means to Martha vs. What it Means to Others

In watching Martha move from one partner to another, trailing a wake of litigation and complaints behind her, I feel like I’m watching the passages of a man who left his first wife for another, and now argues that the marital vows he swore to his second wife (his former mistress) might actually allow him to keep another girlfriend on the side.   Who believes that such a man could ever be loyal to his partner?

As ad revenue from its limited slate of print magazines dries up, the future of MSLO depends on merchandising and licensing, which means that its future depends on the success of its partners.  For that reason, I understand why MSLO wants to maximize the number of partners who can sell Martha-branded merchandise (and why it has struck partnerships with Staples for office products, PetSmart for pet supplies, Michael’s for crafts and Home Depot for home improvement).  But MSLO needs to understand – which 30 years in this business don’t seem to have taught it – that treating partners unfairly will always drive them away.

In the settlement conversations that are now taking place between MSLO and Macy’s, I imagine that MSLO is offering to pay damages to Macy’s in exchange for giving up some of Macy’s exclusivity over the Martha brand.  And it may be true that provoking litigation was the only way to get Macy’s to the table for this conversation.  But even if we assume that this step was necessary to renegotiate the Macy’s deal, and even if we assume that the Macy’s deal is negotiated to MSLO’s liking, what kind of loyalty and long-term revenue can MSLO expect from Macy’s in the future?

The likeliest scenario is that Macy’s will find another brand or designer to work with, and will (like Kmart before it) start cutting back on its own Martha-branded products.  (Macy’s has already discontinued its line of cookware products featuring MSLO’s Emeril brand.)  And it seems likely that Martha will make good money from Penney’s – before she starts complaining about Penney’s, threatening litigation, and seeking yet another retailer as she continues the retail roundabout that finds her another . . . well, MSLO might call them a licensee, but they’ll never be a partner.

IMC Licensing Logo Mark

Related Articles

  • The 3 Licensing Trends We’re Watching in 2021

    We saw many new product trends take flight in 2020, and they are here to stay in 2021 and beyond.…

    Julie Brown

    February 22, 2021

  • Opportunities in Gaming Licensing

    Recently on our podcast, we had an exciting conversation with Lauren Fields Conlon, VP of Licensing and Merchandising at Loaded…

    Emily Wickerham Randles

    January 27, 2021

  • Licensing During Disruption: How Licensing Can Serve the Auto Industry as it has Served Others

    Disruption: The Only Constant Did you ever think you would buy toilet paper on your phone? Neither did supermarkets. Did…

    Stephen Reily

    May 1, 2017

  • A product launch hits close to home: Introducing the new line of AT&T mhealth Baby Monitors

    As a licensing program manager, I always get excited for a new product launch at retail.  Licensees, licensors, agents, manufacturers,…

    Julie Brown

    March 28, 2016

  • Connect and Share with New AT&T Baby Monitors, Available Exclusively at Babies “R” Us

    Baby’s Journey and AT&T Enter the Baby Monitor Category to Provide Parents a New, Convenient and Secure View into Baby’s…

    Julie Brown

    February 16, 2016

  • When Products do the Talking: Volvo Life Paint Says it All

    At this year’s Cannes Lions International Festival of Creativity only one campaign won two Grand Prix Awards (in Design and Promo/Activation), and…

    Stephen Reily

    July 15, 2015

  • My 3 Lessons from CES: How Tech Makes Great Products Happen

    This year’s CES (bigger than ever, and more interesting than usual) failed to offer one show-stopping piece of technology, but…

    Stephen Reily

    January 8, 2015

  • Do you buy “Charmin” or “Toilet Paper”? Category Managers Know, Even if You Don’t

    When you make your shopping list, do you think about buying a category or a brand? Even if you think…

    Stephen Reily

    November 4, 2014

  • Lowe’s OSHbot: The Robot Holiday Sales Associate

    When Orchard Supply Warehouse, a California based home improvement and gardening retailer, was purchased by Lowe’s last year, its employees…

    IMC Licensing

    November 4, 2014

  • Why Mobile Matters this Holiday Season

    My friend called me from Target last week. “I am standing between the Halloween costumes and Christmas decorations, what is…

    Emily Wickerham Randles

    November 4, 2014

  • Are you ready to buy a Chiquita-brand orange?

    Chiquita Brands, a former IMC client, found itself in play this year, with competing offers from the Ireland-base Fyffes, the world’s…

    Stephen Reily

    October 30, 2014

  • Private Label Means Growth – Even for Brands

    Only a decade ago, it was not easy to use the terms “private label” and “brand” together. But private label…

    Stephen Reily

    October 13, 2014

  • 4 Keys to a Knockout Private Label Program

    Gil Phillips, Vice President of Corporate Brands at Kroger told the Cincinnati Enquirer about their house brand strategy, “We’re not offering…

    IMC Licensing

    October 7, 2014

  • Retail development isn’t just about getting into Walmart

    Every business that has ever developed a product dreams of getting on shelf at a Walmart or Home Depot. Big…

    IMC Licensing

    September 18, 2014

  • New channel strategies: Sometimes disruptive innovation is a where, not a what

    Our CEO, Carla Dearing, recently wrote about what makes an innovative product disruptive. Thanks to technology, we assumed for many years that…

    Stephen Reily

    September 4, 2014

  • McDonalds and Starbucks: How Both Get Coffee Pricing Wrong (and Dunkin Doesn’t)

    Kraft Foods recently entered into a license agreement with McDonald’s to deliver McCafé Coffee to a supermarket near you. While…

    Stephen Reily

    September 3, 2014

  • From Budget Friendly to Premium: Will Consumers Buy Into a Premium Priced McCafe?

    I have something I have to get off my chest. I don’t drink coffee. There I said it. I don’t…

    IMC Licensing

    August 24, 2014

  • 5 Top Licensing Trends for Restaurant Brands at Retail: Which Chains Should be in Supermarkets Now?

    Licensing restaurant brands into supermarket products is nothing new.  Brands like Marie Callendar’s (in pies and frozen dinners), TGI Friday’s…

    Stephen Reily

    August 11, 2014

  • Disruptive Innovation: Products That More People Want

    Less is more.  So the theory goes with “disruptive innovation.” A new product is disruptive innovation if it has something…

    IMC Licensing

    July 16, 2014

  • 5 Ways to Evaluate a Potential Licensee

    Licensing a company to expand your trademark into other product categories can be rewarding to your bottom line and strengthen…

    IMC Licensing

    July 15, 2014

  • Consumers Followed Their Noses: How Fragrance Ended Up Everywhere

    Is there any product that doesn’t come in a scented version?  Today you can buy not just scented candles but…

    Stephen Reily

    June 12, 2014

  • The Omni-Product Brand

    For 15 years IMC has been helping the owners of global iconic brands find ways to grow through new products…

    Stephen Reily

    April 3, 2014

  • Backing into Innovation: Capturing New Consumers for Hearing Aids

    While I was at International CES earlier this month I had a chance to meet with leaders of the hearing aid business…

    Stephen Reily

    January 28, 2014

  • Lean In to Cause Marketing?

    When it comes to business, the talented male professional is perceived as “boss” while the talented woman professional in the…

    IMC Licensing

    January 17, 2014

  • CES 2014 – Innovative Partnerships, not Products

    Last week I was one of the 150,000 people swarming around Las Vegas for International CES.  While the show has never…

    Stephen Reily

    January 15, 2014

  • What an Omnichannel World Means for Brand Licensing

    If you want to develop great products that actually sell at retail, you are probably already thinking about how to…

    Stephen Reily

    January 2, 2014

  • Starbucks, Kraft and the $2.7 Billion Divorce

    Last week’s LIMA Bottom Line featured an article I wrote about the recent resolution of a long-running dispute between Starbucks…

    Stephen Reily

    December 23, 2013

  • 7 Most Inspiring Products for Old People are Great New Products for You, Too.

    IMC’s hometown hosted the Louisville Innovation Summit last week  Aging care is a growth industry for Louisville (headquarters for companies like Kindred,…

    Stephen Reily

    November 18, 2013

  • More than Just a Hill of Beans

    Kraft Foods recent announcement of its intent to test market McCafe packaged coffee adds a deep, new wrinkle to the already interesting…

    IMC Licensing

    November 15, 2013

  • Licensing at Tiffany’s: Not a One-Way Street

    On vacation this summer I needed to get my sunglasses repaired.  While waiting, I was surprised to look in the…

    Stephen Reily

    September 16, 2013

  • What Licensing Agencies Can Do For You: A Tale of Chocolate Cereal

    One of IMC’s most deliciously licensed products is Kellogg’s Rocky Mountain Chocolate Factory cereal. The coco-brown box features the names…

    IMC Licensing

    September 4, 2013

  • What does the Local Food Movement mean for Food Licensing?

    In my hometown of Louisville – a city proud of its food culture in a state proud of its farming…

    Stephen Reily

    August 8, 2013

  • Licensing by Litigation: A Bad Business Plan

    Two large-scale lawsuits in the licensing world have recently been stopped by injunctions.  After spending millions of dollars on legal…

    Stephen Reily

    August 1, 2013

  • Paula Deen and Food Licensing: Why Didn’t She have More to Lose?

    Paula Deen, as a brand with great licensing potential, seems almost beyond repair.  While I can imagine strategies that would…

    Stephen Reily

    July 30, 2013

  • What’s Your Innovation Reality?

    What’s Your Innovation Reality? I was recently reviewing some notes from a talk I heard almost two years ago –…

    Stephen Reily

    July 24, 2013

  • Just Married

    Often times we describe a licensing partnership much like a marriage. The Licensee and Licensor meet, are engaged by signing…

    Emily Wickerham Randles

    June 27, 2013

  • Purina Tidy Cats® and Glade™ Tough Odor Solutions: A perfect match

    The partnership between Purina Tidy Cats and Glade Tough Odor Solutions has developed a scented cat litter which has customers…

    IMC Licensing

    June 20, 2013

  • Integrating New Products with Licensed Properties

    Integrating New Products with Licensed Properties Demands on new product development have greatly increased over the last decade with increased…

    IMC Licensing

    June 17, 2013

  • The Humanization Of Our Pets: Key Survey Findings

    The cliche is that pets look like their owners- but will they use the same products? The theory at IMC…

    IMC Licensing

    June 10, 2013

  • What Do Pet Owners Want Next?

    The pet industry is one of our favorites, and not just because most of us at IMC have pets of…

    Stephen Reily

    June 5, 2013

  • Sharing the Love of Brands with Your Pet!

    Pet owners are passionate about their furry little friends and they spend over $50 billion annually to prove it.  They…

    IMC Licensing

    April 4, 2013

  • What Makes Martha Stewart Such a Bad Partner?

    I’ve read lots of articles about Martha Stewart’s recent bout of litigation, but none of them addresses why someone would…

    Stephen Reily

    March 21, 2013

  • 2013 Housewares Show: Forging New Partnerships

    The 2013 International Home and Housewares Show in Chicago is the largest housewares-only fair in the world with 60,000 home goods professionals…

    IMC Licensing

    March 14, 2013

  • A Tale of Two Cracker Barrels

    When I saw that Cracker Barrel, the southern-fried restaurant chain, had recently licensed its brand to John Morrell Group, a…

    Stephen Reily

    February 6, 2013

  • The Slow Death of Commission-Only Deals

    Truly successful brand extensions are the result of pairing leading consumer brands with products that enhance the brand’s reputation and…

    IMC Licensing

    November 26, 2012

  • Why Licensing?

    As advertising as we know it is faced with a rapidly changing environment, brand owners and brand managers are looking…

    IMC Licensing

    November 1, 2012

  • Reinforcing Your Brand Through Licensing

    Some licensed products are very much like the brand’s core product itself. They may be used the same way (like…

    IMC Licensing

    October 15, 2012

  • A Primer on Licensing

    Wherever industry regulars gather, they’re sure to discuss the world’s largest licensor; the world’s citizenry buys more than $23 billion…

    Stephen Reily

    July 27, 2012

  • Working With Licensing Agents and Consultants

    Licensing agencies and consultants can play a central role in the development of an effective licensing program. Whether your company…

    IMC Licensing

    November 22, 2010

  • Why Use an Agency for Licensing?

    Even if your company has an in-house licensing director or staff, there are several reasons to hire a licensing agency…

    IMC Licensing

    May 10, 2010

  • National Brands, Private Label and Licensing

    During a panel discussion about product innovation at the 2009 Grocery Manufacturers Association’s Merchandising, Sales and Marketing Conference, one participant…

    IMC Licensing

    April 15, 2010

  • Licensing 101

    As an agency that develops and manages licensing programs for our clients’ trademarks and brands, we often get asked Why…

    IMC Licensing

    November 8, 2009

  • Retail Strategies Beyond the Top 10

    Every day the list of victims of the faltering economy grows longer.  Circuit City (#32 on National Retail Federation’s, Top…

    IMC Licensing

    September 25, 2009

  • Beyond Royalty Revenue: Measuring ROI from Licensing

    In recent surveys senior marketing professionals say that accountability for marketing services is more important than ever, and that they…

    Stephen Reily

    September 16, 2009

  • Trends in Inbound Licensing

    In the licensing industry, attention is typically focused on strategies to license a brand “out,” extending a brand into new…

    Emily Wickerham Randles

    August 19, 2008

  • The Licensing Professional – Not One Size Fits All

    I cannot count the number of times I have heard companies talk about whether they should hire a “licensing professional”…

    Stephen Reily

    February 19, 2008

  • Licensing Agency Compensation: The Inside Story

    One of the needless mysteries of the licensing industry is the topic of agency compensation.  Although talented professionals neither gain…

    Stephen Reily

    February 19, 2007

  • Food for Thought (on Food and Beverage Licensing)

    Food and beverage licensing is everywhere. A quick trip to the supermarket will produce Nesquik chocolate milk, Oreo ice cream, and…

    IMC Licensing

    August 28, 2006

  • The Bankruptcy Clause: Comforting but Useless

    An experienced reader of license agreements would know exactly where to find what I call the “bankruptcy clause” (about three…

    Stephen Reily

    March 1, 2003

  • When Trademark Licensing looks like Franchising: Avoiding Legal Risk

    If anyone doubted that trademark licensing has become an essential part of brand management, the recent Annual Meeting of the International…

    Stephen Reily

    September 8, 2002

  • The Risks a Licensor Poses to a Licensee: How Can They Be Limited?

    Most form license agreements assume that licensees pose greater threats to licensors than the other way around.  Aside from the…

    Stephen Reily

    August 8, 2002

  • Licensing to Preserve Trademark Ownership

    As all IP counsel know, registration of a trademark depends on that trademark’s use.  A trademark cannot be reserved indefinitely…

    Stephen Reily

    July 9, 2002

  • Trademarks Around the Edges

    Many years ago, companies that made a branded consumer product thought they did only one thing: make that product.  Their…

    Stephen Reily

    March 9, 2002

  • Watch What the Licensor Does, Not What it Says

    Hiring the best trademark counsel – and getting them to draft the best possible license agreement – will not alone…

    Stephen Reily

    March 9, 2002

  • How Accountants Will Change the Face of Trademark Licensing

    As the licensing industry frets about whether the biggest event of the year will be the performance of Harry Potter…

    Stephen Reily

    November 9, 2001

  • License Agreements: Partnerships Worth Getting Right

    Whenever you see a licensor and licensee in litigation with each other you should assume that something has gone wrong…

    Stephen Reily

    September 9, 2001

  • How Many People Does it take to Screw in a Trademark Licensing Agreement

    Because so many brand owners fail to appreciate how important licensing can be for their brand, many of those who…

    Stephen Reily

    August 9, 2001

  • Developing Branded Consumer Products like Consumer Products

    Last month I described how companies find themselves distributing or authorizing branded products that either weaken the protection of their…

    Stephen Reily

    July 14, 2001

  • Why Most Companies Have Too Many Licensors

    If you looked to a corporation’s internal licensing department for evidence of trademark usage and enforcement, as well as development…

    Stephen Reily

    May 20, 2001

  • Licensing Corporate Brands and Trademarks: Knowing What it Should Cost

    As someone who runs a licensing agency for the owners of brands and trademarks, I can be expected to argue…

    Stephen Reily

    February 19, 2001

Services

Licensing is a relationship not merely between brands, but among people. At IMC, we build and nurture both of those relationships while delivering top-notch customer care that treats — and protects — your brand as if it were our own.

About Us

We’re committed to fostering dynamic brand alliances. Often those alliances are born from one brand’s need and another’s ability to meet that need. The IMC team are experts at recognizing and creating those opportunities, but our real expertise is people. Standing side by side, as consultants, partners, peers, and as friends, we’re driven by a singular purpose: creating a smart idea.