What happens if you use a trademarked name?

Using another company’s trademark without permission can expose you to serious legal and business risks. Whether you’re naming a product, advertising online, or even registering a confusingly similar domain, unauthorized use may trigger infringement claims and costly consequences.

Read on to learn exactly what can happen and how to avoid these pitfalls.

What Legal Actions Can Trademark Owners Take Against You?

Infringement Lawsuits and Court Orders

Trademark owners can sue you for unauthorized use that’s likely to cause confusion. If you’re found liable, a court may grant:

Permanent Injunctions: Courts can issue orders permanently stopping you from using the trademark, potentially forcing you to rebrand products, change marketing materials, or shut down websites.

Monetary Damages: You may be required to pay:

• The trademark owner's actual business losses
• Any profits you made from using their mark
• Enhanced damages for willful infringement (up to three times actual damages)
• The trademark owner's attorney fees and court costs

Product Recalls and Destruction: Courts may order you to recall and destroy infringing products, packaging, and marketing materials at your expense.

Cease-and-Desist Letters: The First Warning

Before filing lawsuits, trademark holders typically send cease-and-desist letters demanding that you:

1. Stop using the trademark immediately across all business operations
2. Destroy or recall infringing materials including products, packaging, and marketing content
3. Provide detailed accounting of any profits made using their trademark
4. Transfer confusingly similar domain names to the trademark owner

Ignoring cease-and-desist letters almost always escalates disputes to formal litigation, increasing your legal costs and potential damages.

Customs Enforcement Actions

Registered trademark owners can record their marks with customs authorities worldwide. This enables border officers to:

• Seize suspected counterfeit goods before they enter the market
• Detain shipments for trademark verification
• Impose storage and destruction costs on importers
• Share violator information with trademark owners for potential legal action

These enforcement mechanisms create significant supply chain disruptions and financial losses for businesses using trademarked names on imported goods.

Criminal Penalties for Counterfeiting

Willful trademark counterfeiting (deliberately manufacturing or selling goods with fake trademarks) can result in criminal charges including:

• Federal criminal prosecution with potential prison sentences
• Substantial fines for individuals and businesses
• Asset forfeiture of profits and equipment used in counterfeiting
• Criminal records affecting business licensing and professional standing

Criminal penalties typically apply to intentional counterfeiting rather than inadvertent trademark use, but the consequences are severe.

When Is Using a Trademarked Name Legal?

Nominative Fair Use: You can reference trademarks to identify the trademark owner's products or services, such as:

• ""We repair BMW vehicles"" (service provider identification)
• ""Compatible with iPhone"" (product compatibility statements)
• ""Authorized Dell reseller"" (business relationship disclosure)

Descriptive Fair Use: You may use trademarked terms to describe your own products without implying sponsorship:

• ""Apple-shaped cookies"" (describing product appearance)
• ""Olympic-sized swimming pool"" (standard size reference)
• ""Champagne-colored paint"" (color description)

Editorial and Commentary Use: Clear, non-commercial uses for:

• News reporting and journalism
• Academic research and education
• Parody and satire (with appropriate disclaimers)
• Comparative advertising (when truthful and non-disparaging)

Important Limitations

These exceptions require that your use:

• Doesn't suggest sponsorship or endorsement by the trademark owner
• Uses only as much of the mark as necessary for identification
• Doesn't create consumer confusion about source or affiliation

Always ensure your use falls within these exceptions to avoid infringement.

How Can You Avoid Trademark Infringement Risks?

Before Using Any Name or Logo

1. Conduct comprehensive trademark searches across relevant industries and geographic markets
2. Consult with intellectual property attorneys for professional clearance opinions
3. Document your selection process to demonstrate good faith if disputes arise
4. Consider trademark insurance to cover defense costs and potential damages

If You Receive a Cease-and-Desist Letter

1. Take it seriously and respond promptly through legal counsel
2. Evaluate the merits of the trademark owner's claims objectively
3. Consider settlement options to avoid litigation costs
4. Document all communications for potential future proceedings

For International Operations

• Register your own trademarks in key markets before expansion
• Respect local trademark laws which may differ from your home country
• Monitor trademark databases in markets where you operate
• Train employees on proper trademark use in marketing and communications

Bottom Line: Prevention Is Your Best Protection

The costs of trademark infringement, including legal fees, damages, rebranding expenses, and business disruption, far exceed the investment in proper trademark clearance and legal guidance.

Taking proactive steps to avoid using others' trademarks protects your business from significant legal and financial risks while building stronger, more defensible brand assets.