Magento Open Source, 1.9.x

Magento 1.x Security Patch Notice
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If you go to the expense of creating your own original product images, there is not much you can do to prevent unscrupulous competitors from stealing them with the click of a mouse. However, you can place a watermark on each image to identify it as your property and make it a less attractive target. A watermark file can be either a .jpg (jpeg), .gif, or .png image.

To place watermarks on product images:

1. On the Admin menu, select System > Configuration. Then in the Configuration panel on the left under General, select Design.
2. Click to expand the Product Image Watermarks section.
3. Complete the following steps for the Base, Small, and Thumbnail images:
a. Enter the Watermark Default Size, in pixels. For example: 200 x 300
b. Enter the Watermark Opacity, as a percentage. For example: .40
c. Click the Browse button and select the Watermark image file to upload.
d. Set Watermark Position to your preference.
4. When complete, click the Save Config button.