You can be sued for using the brand name product as an ingredient if:

1) the brand named product formula is patented;

2) you market or advertise that the product contains brand X®;

3) you do either of the above without permission or license from the brand product manufacturer and/or owner of its intellectual property.

This needs a little clarification.

1.) You presumably purchase the brand name product for use as an ingredient, so there should be no liability even if it is patented.

2. You are legal in advertising that the product contains brand X, if you also note on the same advertisement that brand X is a trademark of X company rather than you..

So, for example, you as XYZ Company, sell TEX SPECIAL (your brand name, hypothetically) ice cream containing OREO brand cookies (crushed) or M&M candies and you buy the OREOs from an authorized seller of Nabisco products and the M&Ms;from an authorized seller of M&M Mars. You can, like McDonalds or Dairy Queen do, advertise your ice cream product as containing OREOs or M&Ms;, because that is, after all, quite true. To be sure you are in the right, however, you should add a disclaimer to the effect that "OREO is a trademark of Nabisco. M&M is a trademark of M&M Mars. TEX SPECIAL is a brand name of XYZ Company. XYZ Company is neither affiliated with, authorized by, or associated in any way with Mars or Nabisco." If you do that, which is what lots of sellers do, you are legal since you are not claiming any association with Nabisco or M&M Mars and you are not being misdescriptive of your product and you are not making a false designation of source.

Mr. Burdick is correct (and I was wrong about the #1 above). However, I would like to offer an additional caveat here. Even if one is not technically infringing trademark rights and not passing-off, one can still be liable for trading on the good will which a trademark owner has established. For example, Joe Schmo cannot launch his no-name product containing another's famous trademark brand, and advertise it as such, and thereby obtain instant market recognition, without permission from the trademark owner. It's not consumer confusion (infringement) which would be the cause of action but trading on the good will of the famous brand owner. I believe this falls under unfair competition law.

(and, no, I am not going into dilution law by using "famous brand" as an example, but the same would be true for "well-known brand" or any registered trademark. If the trademark in question is truly famous, then we can go into dilution, which happens to be a favorite "pet" subject of mine).