Take the money and run: Allen wins $5m for stolen image

Several million dollars richer, and with his reputation more or less intact, Woody Allen successfully reached a last-minute settlement in a bruising legal battle with one of America's most headline-prone high-street brands.

The legendary film director appeared on the steps of a lower Manhattan courthouse yesterday morning to announce that American Apparel had agreed to pay him $5m (£3.3m) in damages for the unauthorised use of his image on a billboard advertisement.

In return, Allen agreed to drop a copywright claim against the firm's founder Dov Charney, which was at the centre of a bitterly-fought legal soap-opera that threatened to rake over salacious details of his private life in open court.

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The case had been due to go to trial hours later in what hungry New York tabloids dubbed the "Jewishest" battle the city's courts had ever seen.

"I am told the settlement [that] I am being paid is the largest reported amount ever paid under the New York 'right to privacy' law," Allen told reporters, in a prepared statement.

"It is of course possible by going through the trial a jury might have awarded me more money, but this is not how I make my living and $5 million is enough to discourage American Apparel or anyone else from ever trying such a thing again."

Allen's complaint against the company revolved around billboards erected in Hollywood and New York in 2007 which featured an image of him dressed as a Hasidic Jew, next to text in Yiddish that read "The Holy Rebbe."

Last May, the director sued, claiming that the unsanctioned use of the picture represented an illegal attempt by American Apparel to cash in on his image, which he seldom uses to promote commercial interests.

Allen, along with most legal experts, thought the $10m lawsuit was an open and shut case. But Charney had other ideas, describing the claim as "excessive" and defending the billboard by invoking his first amendment rights to freedom of speech.

In a move that sparked a long-running propaganda war, Charney protested that the image, taken from the Oscar-winning film Annie Hall, had only been erected in a few locations in the two cities.

He insisted that it had no commercial purpose, but was a social comment about the way he and Allen, 73, were portrayed by the media.

To support his case, Charney's legal team initially threatened to rake over Allen's private life, issuing subpoenas to former girlfriends and lovers to testify in court, and requesting intimate information about his family and personal finances.

The tactic last month prompted Allen accused Charney's firm of adopting a "scorched earth" approach, saying it represented a "despicable attempt to intimidate him" into dropping the lawsuit before it reached a public trial.

The allegation was gobbled-up by the media, who billed the trial as a "clash of the Titans" between two men who, in addition to their shared Jewish roots, have both been involved in very public sex scandals.

Allen famously endured a long PR battle with his former girlfriend of 12 years, Mia Farrow, after he began an affair with her adopted daughter Soon-Yi Previn. At the time, in the early 1990s, Allen was 56 and Previn 22. He had known her since the age of ten.

Charney, 40, who comes from Canada and founded American Apparel in the early 1990s, has been embroiled in a string of sexual harassment cases with former employees.

In defeat yesterday, he insisted the fundamentals of that case remained sound, but told reporters that he had been forced to settle by American Apparel's insurance company, which effectively "controlled the defence" in the case, and will foot the lion's share of the bill for damages.

With at least half a nod to the free publicity that the months-long controversy has generated, which may yet exceed the $5 million he has to pay, Charney insisted: "I'm not sorry for expressing myself."

"I have respect for Mr Allen [and] look forward to his next film? I hope to meet him on more friendly terms at a different point."