A state court judge in New York ruled yesterday that Martha Stewart Living Omnimedia Inc. (NYSE: MSO) did not violate its contract with Macy’s Inc. (NYSE: M) when Martha Stewart revealed the contract between the two to rival J.C. Penney Co. Inc. (NYSE: JCP) while J.C. Penney and Martha Stewart were negotiating a $38.5 million investment in Martha Stewart by J.C. Penney. A spokesman for Macy’s said the company would immediately appeal.

This represents only the first round in the tussle between Macy’s and J.C. Penney over rights to use the Martha Stewart brand. Macy’s asserts an exclusive right to certain merchandise, including bedding and kitchen items. J.C. Penney and Martha Stewart counter that the deal between Macy’s and Martha Stewart is not exclusive.

J.C. Penney planned to sell bedding and other products designed by Martha Stewart, but under a different brand name. The struggling retailer, which just fired its chief executive officer, decided instead to keep these products off the shelves for the time being.

Macy’s lawsuit against J.C. Penney and Martha Stewart resumed this week after a hiatus of nearly a month while the parties tried to reach a mediated agreement.

J.C. Penney stock is up about 0.4% in premarket trading this morning, at $14.15 in a 52-week range of $13.55 to $36.89.

Macy’s shares are inactive, having closed yesterday up about 0.5%, at $44.56 in a 52-week range of $32.31 to $44.95.

Martha Stewart shares also are inactive, having closed yesterday up 4.3% at $2.42 in a 52-week range of $2.28 to $3.89.

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