Trademark protection legislation was enacted to give trademark owners exclusive proprietary rights, a monopoly over their trademarks, and safeguard the public’s goodwill. It was designed to prevent the sale of counterfeit goods under a well-known brand name, but when these owners go above and beyond their legal rights to defend their mark, the term “trademark bullying” is used. Trademark bullying takes place when one party attempts to threaten another party by alleging that the other party has infringed upon the aggrieved party's trademark. Such allegations are supported using vague and baseless claims. The aggrieved party may intimidate the other party by initiating legal proceedings against them or by sending cease and desist legal notices. The practice of a proprietor being overprotective of their mark and enforcing trademark rights beyond the required limit and scope of trademark law is called Trademark Bullying.
When large corporations aim to eliminate competition from markets, they send out a standard cease and desist letter that includes legal threats of trademark infringement and dilution. They also indicate that they have had success litigating other businesses that use identical trademarks, and then they file an opposition action against the small business. The effect on small businesses that lack financial or legal backing is that they seek a settlement in which they are asked to remove their marks, which is accepted by the small businesses. Because of the litigation, small businesses have to pay a lot of money for rebranding, removing products from the market, and losing their reputation.