In decision we predicted yesterday, a New York State appellate court judge denied a request from Macy’s Inc. (NYSE: M) prohibiting J.C. Penney Co. Inc. (NYSE: JCP) from selling goods designed by Martha Stewart Omnimedia Inc. (NYSE: MSO) but that do not carry a Martha Stewart label. Penney is now allowed to sell the bedding and other household items under the store’s “Everyday” brand.

Penney had voluntarily withheld the goods from sale pending the court decision and the company’s warehouses had reportedly stacked up $100 million worth of the Everyday-branded goods awaiting the result of the court’s ruling on the restraining order. A court order banning Penney sales of any Martha Stewart-branded items remains in force.

Macy’s had sought the restraining order while it appealed an earlier court ruling that permitted Penney to sell the Everyday-branded items. The courts have been reluctant to restrain Penney from selling the goods, apparently willing to let the Macy’s suit wend its way through the system and then making Penney pay damages if it turns out that Macy’s suffered injury from the sale of the Stewart items.

Shares of Penney’s stock are up 1.7% shortly after noon today, at $14.99 in a 52-week range of $13.55 to $36.89.

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