This lawsuit is bananas. B-A-N-A-N-A-S.
Earlier this year, the Velvet Underground—which disbanded forty years ago and has only reunited twice since then—filed a lawsuit against the Andy Warhol Foundation for the Visual Arts. It seems that despite their mutual enmity, founding members Lou Reed and John Cale agreed they were not happy seeing their first album's iconic banana image—which was designed by Warhol—being licensed to iPod products. For these two rock n' roll cynics, Apple using their album cover was a big ba-no-no.
So they filed suit against Warhol's Foundation, although they didn't claim they owned the banana image. Rather, they argued the album cover was public domain and therefore ineligible for licensing. But they soon changed their approach, dropped the public domain argument and instead argued the Warhol Foundation couldn't claim a copyright over the image.
But it seems the VU may have slipped up on the banana peel lawsuit. Citing the initial public domain argument and the band's reticence to claim copyright over the image for themselves, the Warhol Foundation argued there simply isn't a controversy in this lawsuit. The Foundation also offered the band a covenant not to sue if the Velvets license the banana for their own purposes.
Agreeing with those points, a federal judge in New York tossed the copyright portion of the lawsuit. But it ain't over yet: The trademark issue still remains. The Velvet Underground argue that the banana image is so closely identified with the band, anyone who sees the image licensed on a product may understandably (but incorrectly) assume the VU has endorsed said product. In that regard, they may get somewhere. So this lawsuit may still prove fruitful for the band.