New York-based Hudson + Broad Inc. is suing JCPenney Corp. Inc. (Plano, Texas) for breach of contract and misappropriation of trade secrets in U.S. District Court for the Southern District of New York. The visual merchandising and branding firm, which created the oversized Plexiglas LED iconic fixture for the department store’s new Fair and Square initiative, seeks $20 million in compensatory damages and an additional $20 million in punitive damages.
"Top level executives at JCPenney, including those who report directly to ceo Ron Johnson, engaged Hudson + Broad to develop this unique fixture with the explicit promise that this proprietary product, if accepted, would only be ordered from us and that our concept would not be misappropriated and bid out to other manufacturers," says James Maharg, president of Hudson + Broad. "Yet, JCPenney is doing exactly what it promised it would not do - which is a huge disappointment from a company claiming Fair And Square as its image."
According to a release from Hudson + Broad, JCPenney executives contacted the company in December 2011 asking for the creation of a fixture that would serve as a symbolic icon to be rolled out to stores nationwide. The fixture needed to be capable of changing colors to match JCPenney’s color of the month. Hudson + Broad developed the square fixture, which was installed in JCPenney’s Manhattan Mall store for Johnson's January 25, 2012, presentation of the new JCPenney initiative, as well as at the retailer’s corporate headquarters in Plano.
Following Johnson's January presentation, executives asked Hudson + Broad to deliver more than 1800 fixtures to be installed in JCPenney locations. The supplier says it worked with the retailer in February and March to plan the full roll-out, but on April 3, the JCPenney Procurement Department notified Hudson + Broad that the retailer had sourced the fixture elsewhere.
After Hudson + Broad reminded JCPenney that the fixture was a proprietary product and that it would not authorize the retailer to have it produced elsewhere, JCPenney executives ceased communication with Hudson + Broad.