The designer Martha Stewart gave Macy's exclusive rights to her product line and then partnered with JCPenney for a Martha Stewart boutique. Now Macy's is suing. - 

Martha Stewart is back in court next week. She will be testifying in a lawsuit between Macy’s and JC Penney. The retail chains are battling over who has the right to carry Stewart’s line of products.

Last year Martha Stewart renewed an agreement giving Macy's exclusive rights to sell her line of cookware, home décor and textiles. Under that agreement the only other place Stewart could sell those products is in her own stores.

Stewart’s lawyers argue that she is simply doing what her contract allows -- selling her products in her own store. At issue is the location of the store.

“If it was located next to JC Penney that would be fine. This just so happened that it’s located within JC Penney,” says Dave Reibstein who researches product line strategy at the Wharton School.

JC Penney is calling the Martha Stewart store within a store a boutique.

Kevin Keller, a professor of marketing at Dartmouth College, says the struggling retailer has a lot at stake in this case.

“They’ve invested in this. This is something they see as part of their strategy going forward and clearly want this to happen," says Keller.

Stewart told Macy’s about her plans to partner with JC Penney the night before the deal was announced. Reading from a script, she said that it would be good for both companies, “even though you might not agree.”

Follow David Weinberg at @@randomtape