By Karen Freifeld
NEW YORK (Reuters) - J.C. Penney Co <JCP.N> and Martha Stewart Living Omnimedia <MSO.N> on Monday announced a revised agreement that eliminates Stewart's products in home goods categories to which rival Macy's Inc claims exclusive rights.
The amended deal calls for the domestic doyenne's company to design Martha Stewart-branded products for J.C. Penney in window treatment, holiday and other categories not claimed by Macy's.
Macy's sued Penney and Martha Stewart Living after the two announced a partnership in December 2011. Macy's said the agreement breached its contract with Martha Stewart that included exclusive rights to Martha Stewart-branded cookware, bedding and bath products.
In a statement, Macy's said the revised agreement was a "tacit admission" that it is the only store that can sell Martha Stewart bed, bath and kitchen goods and that the Penney-Martha Stewart contract was "illegal."
A New York judge who presided over Macy's suit against Penney and Martha Stewart's company had set a deadline of this Friday for Penney and Stewart's licensing company to negotiate changes to their agreement before he ruled on the legal challenge from Macy's, according to people familiar with the case.
Macy's said its claims for "substantial" damages it suffered as a result of Penney's interference with Macy's contract and Martha Stewart's breach remain before the court.
The amended contract runs through June 30, 2017, according to the announcement, shorter than the 10-year deal in the original agreement. In addition, the statement says Penney will no longer have representation on Martha Stewart Living's board of directors.
(Editing by Dan Grebler)