Trademark infringement is the unauthorized use of a trademark or service mark on or in connection with goods and/or services in a manner that is likely to cause confusion, deception, or mistake about the source of the goods and/or services. In other words, if a competitor designs a similar logo to a famous brand, and sells goods such that customers think they are really buying the famous brand, then it is infringement because it is meant to deceive customers about the origin of the goods. Knock off designer apparel are obvious infringement cases.
The first step would be to send a cease-and-desist letter. If that is ignored, the only option may be to sue.
The main considerations in most trademark infringement suits are the likelihood of confusion, dilution, and tarnishment.
The purpose of trademark law is primarily to protect customers. It does benefit businesses, but courts are or more interested in whether consumers are being misled as to the origin of goods they purchase. For this reason, the likelihood of confusion between your mark and an infringing mark is important. Some factors the court will consider will be whether the potentially infringing trademark is being used on competing goods or services, whether consumers would likely be confused by it, and whether the trademark is being used in the same geographical area or on related goods.
Dilution is diminishing the capacity of a mark to identify and distinguish goods or services. It eats away at a trademark’s distinctiveness. One fun example was IHOP (the International House of Pancakes) suing IHOP (the International House of Prayer) over its use of the acronym.
Tarnishment is when an infringing mark portrays the infringed mark in a negative light, threatening the commercial value of the infringed mark. A famous case was Victoria’s Secret suing Victor’s Little Secret (an adult novelty shop) over the name. Another was Mattel suing Internet Dimensions, who had linked Barbie with pornography. Mattel held the such linkage would negatively impact consumers’ impressions of Barbie.