Katherine Heigl, a star of the television series Grey’s Anatomy and films like Knocked Up and 27 Dresses, recently made non-TMZ headlines when she sued drugstore chain Duane Reade for $6 million dollars for posting a photo of her to its Twitter and Facebook accounts, accompanied the text “Love a quick #DuaneReade run? Even @KatieHeigl can’t resist shopping #NYC’s favorite drugstore.” Here’s a copy of the Twitter post that has caused such a stir:

Click here to view the image.

What’s the problem, you ask? In a time when celebrities regularly post photos of their daily lives to public Twitter accounts and selfies dominate the social media space, what’s the big deal with a company posting a paparazzi photo of a celebrity that no doubt was already available in the public domain? The problem, according to Ms. Heigl, is that Duane Reade used the photograph for its own commercial advertising without her permission, exploiting Ms. Heigl’s celebrity status for its own commercial gain.  This conduct, according to Ms. Heigl’s complaint, is a violation of the Lanham Act, her right of privacy and publicity under New York Civil Rights Law, and New York unfair competition.

Celebrities like Ms. Heigl have long recognized the value in their names and images.  Endorsement deals between celebrities and companies have been a staple of the advertising industry for years,banking celebrities millions of dollars.  In addition, celebrities have long objected to the unauthorized use of their image for commercial purposes, relying on the Lanham Act and state publicity and privacy laws to protect the value of their image and name.  For example, in a case brought by Michael Jordan against Jewel Food Stores, Mr. Jordan claimed that an advertisement that congratulated him for induction into the Hall of Fame misappropriated his identity for commercial benefit, in violation of the Lanham Act, the Illinois Right of Publicity Act, Illinois’ deceptive-practices statute, and the common law of unfair competition.  More recently, the White House objected to the attempted commercial use by Samsung of baseball star David Ortiz’s selfie with President Obama.

The use of celebrities in advertising has become more complicated as they have embraced social media as a forum for promotional and marketing activities.  Companies that have formal endorsement agreements in place with celebrities may be able to avoid suits like Ms. Heigl’s, but both parties must be careful to comply with the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising which requires disclosure of any “material connection” between the company and the celebrity—celebrities who are paid (or given freebies) to endorse a product, or who have a stake in the company, must clearly disclose the existence of a relationship in tweets, posts, or other interactions with consumers via social media.  If a company posts celebrity photos (as in the recent NAD decision involving eSalon) or for that matter re-tweets a celebrity without consent or  a formal endorsement relationship, it may face potential risks, given the blurry line that exists between editorial and commercial use of a celebrity name/image in social media.

In short, while the use of celebrities in advertising and promotion may potentially be profitable, the legal landscape is littered with regulatory landmines and litigation bombshells.  Celebrities and public figures know that their image is valuable and will go to great lengths to protect that image.  Although the paparazzi and the celebrities themselves may make the lifestyles of the rich and famous seem readily accessible on social media, the savvy marketer will tread carefully before trying to harness the power of a celebrity’s brand to bolster its own without getting permission to do so and properly disclosing the relationship, lest the dollar value associated with the celebrity name end up coming out of the marketer’s pocket rather than showing up on its balance sheet.