Cigar's fame brought with it the potential for profit, and Paulsen Enterprises took a step that raises broader questions for sellers of art images. Paulsen contracted with CMG Worldwide, Inc., a company in the business of protecting and promoting trademarks and the names, likenesses, voices and other depictions of celebrities, to handle the images of Cigar and the Brookside Stables racing silks. CMG is charged with commercializing the images through licensing agreements, which are contracts by which third parties pay a fee for the permission to use a protected image or name on a commercial product. The trademark holder can police its trademark, using litigation, to chase away competitors who seek to have their goods identified with the other's trademark by either appropriating the holder's mark or using another, confusingly similar one. The shape of a Coca-Cola bottle and the distinctive yellow box in which Kodak markets its film are examples of trade dress.
Some trademarks develop a value of their own apart from purely identifying a product.
It is in this latter sense that CMG is claiming trademark protection for Cigar and the Brookside racing silks. Presumably, a painting with Cigar's image, and marketed using Cigar's name, will be of greater appeal, and value, in the market than would an identical painting that did not use the well-known name or the distinctive features of the famous horse. After reaching agreement with Paulsen to represent the marks, CMG sued Jenness Cortez and her publisher. CMG claimed that, in the absence of a license from CMG, Cortez's use of the images of Cigar and Brookside's racing silks violated the Lanham Act, a federal statute that protects trademarks and trade dress, and several state laws protecting a property owner's right to control and commercially exploit the property rights in the images. CMG sought damages and an injunction to halt all sales by Cortez of her lithographic prints of Cigar.