exceptional case

Tom Waits is a professional singer, songwriter, and actor who began his career in the early 1970s. Since the early 1970s, when his professional singing career began, Waits has recorded more than seventeen albums and has toured extensively, playing to sold-out audiences throughout the United States, Canada, Europe, Japan, and Australia. In 1987, Waits received Rolling Stone magazine's Critic's Award for Best Live Performance, chosen over other noted performers such as Bruce Springsteen, U2, David Bowie, and Madonna. Waits has a raspy, gravelly singing voice, described by one fan as "like how you'd sound if you drank a quart of bourbon, smoked a pack of cigarettes and swallowed a pack of razor blades.... Late at night. After not sleeping for three days." Tom Waits does not, however, do commercials. He has maintained this policy consistently during the past ten years, rejecting numerous lucrative offers to endorse major products. Moreover, Waits' policy is a public one: in magazine, radio, and newspaper interviews he has expressed his philosophy that musical artists should not do commercials because it detracts from their artistic integrity. In 1988, Frito-Lay, Inc. and its advertising agency Tracy-Locke, Inc. developed a radio commercial for a new product, SalsaRio Doritos. The commercial concept drew inspiration from Waits' 1976 song "Step Right Up," a parody of advertising. The initial efforts of the ad agency's creative team, using a respected professional singer with a deep bluesy voice, met with disapproval from executives at both Tracy-Locke and Frito-Lay. Tracy-Locke then auditioned several other singers who could sing in a gravelly style. Stephen Carter was among those who auditioned. Over ten years of performing Waits songs as part of his band's repertoire, he had consciously perfected an imitation of Waits' voice. During the production process, Tracy-Locke personnel expressed concerns about the legal implications of Carter's skill in imitating Waits. On the day the commercial was due for release to radio stations across the country, Grossman had a ten-minute long-distance telephone consultation with Tracy-Locke's attorney, asking him whether there would be legal problems with a commercial that sought to capture the same feeling as Waits' music. Grossman then presented both the Carter tape and the alternate version to Frito-Lay, noting the legal risks involved in the Carter version. He recommended the Carter version, however, and noted that Tracy-Locke would indemnify Frito-Lay in the event of a lawsuit. Frito-Lay chose the Carter version. The commercial was broadcast in September and October 1988 on over 250 radio stations located in 61 markets nationwide, including Los Angeles, San Francisco, and Chicago. Waits heard it during his appearance on a Los Angeles radio program, and was shocked. He realized "immediately that whoever was going to hear this and obviously identify the voice would also identify that [Tom Waits] in fact had agreed to do a commercial for Doritos." In November 1988, Waits sued Tracy-Locke and Frito-Lay, alleging claims of misappropriation under California law and false endorsement under the Lanham Act. The case was tried before a jury in April and May 1990. The jury found in Waits' favor, awarding him $375,000 compensatory damages and $2 million punitive damages for voice misappropriation, and $100,000 damages for violation of the Lanham Act. The court awarded Waits attorneys' fees under the Lanham Act. Defendants Frito-Lay, Inc., and Tracy-Locke, Inc., appeal a jury verdict and award of $2.6 million in compensatory damages, punitive damages, and attorney's fees, in favor of singer Tom Waits.