NEW YORK – When J.C. Penney announced in December that it had cut a deal to carry Martha Stewart-branded home goods in its stores, it didn’t take Macy’s long to say: Wait a minute, Martha.

More than five years ago, Macy’s signed its own exclusive contract to sell bedding, towels, dinnerware, cookware and the like from Martha Stewart Living Omnimedia. Under the terms, Martha Stewart Living isn’t allowed to sell such wares at a Macy’s competitor, including J.C. Penney, Macy’s says.

On Jan. 23, Macy’s, the nation’s second-largest department store chain, sued Martha Stewart Living in New York State Supreme Court, seeking to stop the deal and collect damages. Martha Stewart Living, which has until today to respond to the lawsuit, will argue that the deal doesn’t violate the contract because it will operate its own stores inside J.C. Penney, a person familiar with its strategy said.

Retailers increasingly will knock heads as they compete to lock up celebrity designers in a battle for market share, according to Craig Johnson, president of consulting firm Customer Growth Partners.

Darcie Brossart, a spokeswoman for J.C. Penney, said the company had no comment. Jim Sluzewski, a spokesman for Macy’s, said the company is not commenting beyond the lawsuit.

Martha Stewart, chief editorial, media and content officer of Martha Stewart Living, declined to comment on the suit.

“We love Macy’s,” Stewart, 70, said last Tuesday at a Staples store in New York, where she was unveiling a home organizing line of products. “They’ve been great partners.”

Macy’s, which is based in Cincinnati, has outperformed J.C. Penney, with a 5.4 percent gain in sales at stores open at least a year in the 11 months ended Dec. 31 compared with J.C. Penney’s 0.7 percent increase.

Last year Macy’s shares advanced 27 percent; J.C. Penney rose 8.8 percent. Martha Stewart Living fell less than 1 percent in 2011.

Both Macy’s and J.C. Penney have anchor stores at Fort Wayne’s Glenbrook Square.

Martha Stewart Living approached Macy’s about a deal in 2005, not the other way around, according to the complaint.

The previous year, Stewart was sentenced to five months in prison after being convicted of obstructing justice in an insider trading case.

Tying up with a convicted felon was risky for Macy’s because Stewart’s brand was “under pressure by very public proceedings and their aftermath,” the complaint says.

Still, Martha Stewart merchandise was “lucrative” and generated “billions of dollars of sales,” according to the complaint. The Martha Stewart Collection is one of Macy’s biggest home goods brands. Household merchandise accounted for 15 percent of the chain’s 2010 sales of $25 billion.

“From Macy’s point of view, they obviously are upset,” Johnson said. “They threw Martha a nice little lifeline. Macy’s had invested a lot of money in it, promoting the brand.”

For J.C. Penney CEO Ron Johnson the deal is part of a strategy to revive sales at the department-store chain from Plano, Texas, which in November posted its first quarterly loss in two years.

Representatives from Macy’s and Martha Stewart Living met Dec. 15 to discuss the J.C. Penney deal, according to the complaint. Macy’s said the Martha Stewart Living executives didn’t address the most “critical question” Macy’s had posed: Why it believed it could enter a deal with J.C. Penney.

In a Feb. 2 statement, Martha Stewart Living said it was “confident” it hadn’t breached the terms of the agreement.

“It’s good for our partners, our consumers and our brand to have a wide range of Martha Stewart products available in a variety of top retailers and we structure all our commercial agreements with this strategy in mind,” the company said.

Martha Stewart Living’s interpretation of the Macy’s contract is that it can sell goods through its own physical stores and its own websites, according to the person, who is familiar with internal deliberations. Under that theory, the stores inside J.C. Penney would be Martha Stewart Living’s, said the person, who declined to be identified because she wasn’t authorized to speak publicly on the matter.