licensing laws

Do licensing laws/intelluctual property rights apply to trash? Example; liquor bottles- once they are emptied, they are thrown out. If someone were use the emptied bottles for something with the existing label of the liquor brand on them (like artwork/craft-type stuff), are they liable for damages?

You're not using trash per se; you're using an empty bottle with a registered trademark, regardless of where you obtained it. (In my opinion.) Unless you specifically request permission to use the trademarked item, yes, in my opinion, I believe you could have potential legal issues, particularly if you're offering the artwork/craft items for sale. Have you contacted the original trademark owner and indicated how you intend to use their label?

It is amazing how creative people come up with recycling ideas. I've thought of several myself, but have narrowed the field down to one fine choice: a collage of powdery Dorito goodness on a Boone Farm bottle, photoshopped to an orangey glow?

Flea markets, brace yourselves : )

Okay; are there any trademark/licensing laws/loopholes that pertain to 'intended use': example- liquor bottles 'intended' use can be described as a package for liquor to be transported/stored in. If i were to use the empty liquor bottle for something other then its 'intended' use (for example to make a candle), do the law(s) still apply?
It seems like a gray area and naturally not something worth risking if you're battling companies with deep pockets and teams of lawyers.
without getting into details, we had contacted a company directly about using their trademark & getting licensing, they said they couldnt give us licensing right now (for a variety of reasons), we explicitly said okay & that we would continue to work on our business plan (as we were two guys working out of our apartments), they agreed that was fine, then months later we got a demand letter from a 3rd party company representing them (they basically are contracted by the brand to search/protect their label) for trademark infringement.

If you're looking for "loopholes," contact a trademark attorney. http://www.legalmatch.com/law-librar...ringement.html may help clarify in the meantime. I'd suggest you do that immediately, particularly if you've already been advised NOT to proceed.

We've spoken with an attorney & he basically said that at this point (from a $ perspective) it would be cheaper to settle with them then to risk being taken to court and have to pay the legal fees association with that. We ended up settling with them for roughly 1/4 of what they asked for.
You would think that trademark/intellectual property laws would clearly state how long/what form they are applicable (i.e. until the product is used for its intended use, until the product is destroyed, indefinitely).

Seriously, does having the name of the company add value to the product? I mean, I'm trying to picture a Boone Farm logo adding ambiance to a craft project and am having trouble.

Does NOT having the logo on their somehow detract from what you are making?

Then it appears you already have your answer. On the other hand, I don't see a problem with designing a label of your own, trademarked, of course.

Yes absolutely (without getting into details).
I'm willing to bet that the difference between them selling & not is the logo/brand of the 'used' item.
thank you for your help.

Perhaps there is the grounds for their position. If their copyrighted name adds value to your item, then you are, in a sense "profiting" from the use of their name.