Whereas the City of Heroes dispute involves a company making a product that consumers can use to emulate trademarked characters, iPod My Photo seems a lot more straightforward from the trademark perspective: the company transforms a consumer's picture into something that looks like an iPod ad. See larger samples here. The company is, for profit, emulating the distinctive iPod ads, including the image of the iPod (though a consumer can say "no," the default is "draw the subject(s) wearing an iPod"). Seems like something that might cause post-sale confusion about whether Apple authorized the images -- and it seems like something Apple might want to monetize itself, if it's so darn popular that people will pay to advertise not just the iPod, but the ad style itself.

It's almost incidental that the site uses "iPod" as a verb, which is supposedly a trademark no-no. In the past, using a trademark as a verb might have helped slide it into genericity, but in these IP-savvy days I doubt it makes any difference. We all know that "Xerox" and "Google" are trademarks, even as we instruct others to xerox and google in appropriate contexts. (The verbs "iPod," "xerox," and "google" are examples of zero derivation, in which a word is made to play a different part of speech without any suffix or other marker such as "-ize." English, that most flexible of languages, never ceases to amaze me with its adaptability.)

That being said, the site's pretty cool; I wouldn't turn down an iPodized picture of myself, or maybe my cat -- the cat sample picture looks good.