Plaintiff winery licensed the MARILYN MONROE name and likeness from the Monroe licensing entity, and sold wine under the MARILYN MONROE brand for many years, displaying a succession of images of Marilyn on its labels, over the years. At one point it also licensed the copyright in a famous nude photograph of Marilyn on Red Velvet, from the photographer (historical aside – nude photos used to be scandalous) and sold wine with the photo on the label. The photographer terminated the license and then licensed the photo to Defendant, a different winery, which reproduced the photo on its label. Plaintiff sues on trademark infringement for use of a photo that it can no longer use, but defendant can.
As discussed here by Prof Patry, plaintiff prevails. Even though defendant utilized the work under a valid copyright license, such use created a likelihood of confusion with plaintiff’s trade dress, which consisted in part of the likeness of Marilyn on the label. The good professor questions the decision, noting the paradox that the plaintiff could prohibit the use of an image by the rightful owner, when itself could not use that image.
I’ve been emailing and phoning Bill this week about this paradox, and I think we pretty much agree now that the decision is ok. I guess I would phrase it this way – the bundle of rights that is a trademark, contains a negative right to prohibit all those usages that would create the likeihood of confusion but the bundle of positive rights is not identical – the trademark owner cannot use all similar images to its own, if it does not own copyright in them.
Example: Coca Cola has by now built up strong rights in the use of polar bears as trademarks for Coke. I might create a polar bear and own valid copyright in it – except that I cannot use it as a trademark for soda if it creates a likelihood of confusion with Coke’s trademark rights (and, Coke cannot use an image of a polar bear that infringes my copyright in my polar bear).
So the scope of protection for a ‘fluid’ trademark can be hard to articulate with precision. Take images that have been updated many times over the years, such as the BETTY CROCKER or AUNT JEMIMA logos. Some of these images have been modified so any times that, from a copyright point of view, had they been independently created, the first in the series might not infringe the copyright in the last of the series (see the series of Betty Crocker images below, for example).

One would have to do a likelihood of confusion analyis of the marks still in use, a copyright analysis of images no longer in use, as well a ‘residual goodwill’ analysis of logos no longer in use, to identify all the potential images that would infringe the trademark rights in this ‘series’ of marks. I’ll call the totality of the prohibited usages the negative penumbra.
However, within that negative penumbra may be certain images in which third parties lawfully own the copyright, for example because it was an artistic work that makes fair use of the protected image.

It would seem therefore that the ‘positive penumbra’ of trademark rights would be smaller than the negative penumbra, as the trademark owner would not itself be able to use those images without the permission of the copyright owner – the Red Velvet Marilyn photo being one such example.
Berry Croker image from here.
‘Home Cookin’ image from here.