"In order to be confused, a consumer need not believe that the owner of the mark actually produced the item and placed it on the market. The public's belief that the mark's owner sponsored or otherwise approved the use satisfies the confusion requirement."
"Trademark law seeks to prevent one seller from using the same 'mark' as--or one similar to--that used by another in such a way that he confuses the public about who really produced the goods (or service)." DeCosta v. Viacom Int'l, Inc., 981 F.2d 602, 605 (1st Cir. 1992); WCVB-TV v. Boston Athletic Ass'n, 926 F.2d 42, 43 (1st Cir. 1991).
Here is an Article by Stephen J. Jeffries and Edward Joseph Naughton concerning the Supreme Court decision that says some confusion is allowed in trademark cases ( KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc, 125 S.Ct. 542 (2004)).
The Second Circuit Court of Appeals puts in in context with a very revealing statement concerning knockoffs which is what the Lanham Act is all about.
Here are some short outlimes of court cases about confusion:
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