Rebranding rut: J.C. Penney sued for $40 million over new icon
J.C. Penney Co.’s effort to shake up its look isn’t going entirely smoothly – the retailer is being sued for $40 million by lighting design and branding firm Hudson + Broad Inc. over its new Fair and Square icon.
In a complaint filed with U.S. District Court in Manhattan, Hudson + Broad accused the department store chain of breach of contract and misappropriation of trade secrets.
At stake, the large, square fixtures made with Plexiglas and LED lights that J.C. Penney is placing around its stores to mirror its new sharp-edged logo. The retailer lost $87 million in its most recent quarter but now has a new chief executive, fresh advertisements, a simpler pricing structure and changing store interiors -- of which the fixtures were a part.
Hudson + Broad, a small New York-based company, said it developed and created the first of the displays under an exclusive agreement, only to have J.C. Penney start farming out production to other manufacturers.
The deal was first struck in 2011, according to the complaint. Hudson + Broad said it began creating squares that could change colors on command. One was installed at J.C. Penney’s Manhattan Mall store; another pair was installed at the chain’s corporate headquarters in Texas.
Hudson + Broad said J.C. Penney then asked for 1,800 units to be installed in more than 700 stores. But in the midst of Hudson + Broad’s planning, the retailer decided to source the units elsewhere, according to the complaint.
The TriBeCa-based branding firm said in the lawsuit that it was “shocked beyond belief” and told J.C. Penney that the product was proprietary before the chain’s executives stopped all communication.
J.C. Penney declined to comment on the pending litigation. Hudson + Broad is seeking $20 million in compensatory damages and $20 million in punitive damages.
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