The court dismissed Burck’s state law right of privacy claim (i.e. right of publicity claim) on the basis that the M&M Cowboy character depicted in M&M’s ads were merely personifications that do not fall within the literal meaning of "portrait" or "picture" of a person as required by New York’s right of privacy statutes (N.Y. Civ. Rights Law § 50 and 51) which protect against the "nonconsensual commercial appropriations of the name, portrait or picture of a living person”:
Here, there was no attempt to create a portrait or picture of Burck himself. Rather, the purportedly infringing images were M&M characters wearing Burck's signature outfit. The images were not portraits or pictures of Burck as The Naked Cowboy, but of M&Ms dressed as The Naked Cowboy. Thus, they do not violate sections 50 and 51, and accordingly, Burck's right of privacy claim is dismissed.
The court added that the issue of whether M&M’s ads would be viewed as parodies, and thereby negating any likelihood of confusion or constitute a First Amendment fair use affirmative defense, raises factual questions that are inappropriate for deciding on a motion to dismiss.
I think Ron Coleman’s post on the decision on his Likelihood of Confusion® blog summarizes the situation most appropriately:
This case will settle, in all probability. It is hard to understand, however, how any rational fact finder could consider this use of the “concept” of the Naked Cowboy, and what he does, to cause likelihood of confusion here, as opposed to merely alluding to it, having fun with it — an homage. Again, we ask: Is a mere reference to a cultural phenomenon likely to make the average viewer think that phenomenon is the origin, sponsors, or “approver” of the referencer?