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(Reuters) - Talks between Macy's Inc (M.N) and J.C. Penney Co Inc (JCP.N) to settle their dispute over home goods designed by Martha Stewart have petered out, making it more likely a judge will have to resolve the matter, the Wall Street Journal reported on Friday, citing people familiar with the matter.
The two department store chains gave closing arguments before Justice Jeffrey Oing in state Supreme Court in Manhattan in August. The judge could have ruled in the autumn but gave the parties time to reach a settlement on their own.
No discussions are currently taking place, said the people cited by the Journal, who also said the two sides have held on-and-off talks since closing arguments but failed to agree on the amount of damages.
A lawyer for Penney, Martin Edel, declined to comment, referring the inquiry to a Penney spokeswoman, who declined to comment.
Macy's lawyer, Ted Grossman, did not immediately return a request for comment, nor did a Macy's spokesman.
Macy's sued Penney and Martha Stewart Living Omnimedia Inc MSO.N in 2012 after the two announced a partnership in December 2011 that called for Penney to build Martha Stewart shops at nearly 600 of its stores.
Macy's argued that the agreement breached its contract with Martha Stewart that included exclusive rights to Martha Stewart-branded cookware, bedding and bath products.
In October, Penney announced a revised agreement with Stewart's company that eliminated her products in categories to which Macy's had claimed exclusive rights.
Earlier this week, Macy's and Martha Stewart Living Omnimedia reached a settlement in their own dispute but did not disclose the terms. Stewart's merchandise is Macy's top selling home goods line.
What remains to be settled between Macy's and Penney are damages to recoup attorney's fees and lost profits.
Reporting by Phil Wahba in New York; Editing by Meredith Mazzilli