In general, a brand owner files for a brand to help create a distinct identity for the brand. Once the brand becomes famous, the protected trademark gets affected and sometimes the trademark could become generic. When that happens, the uniqueness of the brand name or logo or symbol for which the brand owner had filed for the trademark will be lost.
After a trademark is held to be generic, the protection is lost, and the previously protected mark can now be used by competitors of the brand owner and other manufacturers in any category of goods and services. This in turn will have a direct impact on the business of the brand owner.
The impact of a trademark generalization can be understood on a practical level with the help of a few examples. See How can I challenge a trademark as generic? One of the most important case of trademark generalization is the American Thermos Products Co. V. Aladdin Industries, Inc. American Thermos is a bottle manufacturer and it had trademarked the word “thermos”. Moving forward, it could not stop other manufacturers from using the word “thermos” to describe their products. This led to the word “thermos” to become generic and the public no longer associated the word “thermos’ to their brand. It also led to a huge financial loss to the company.
Google knows the word “google” is used by people as a verb. Usage of a trademark as a verb often leads to generalization. To prevent this from happening has come up with a proper usage of its trademarks. Similarly, Xerox has also come up with certain advertisements to make people aware of its trademarks. A famous one includes “You can’t Xerox a Xerox a Xerox”. See How can a company protect against genericide? for more background.
Possibly huge negative impact
It can be concluded that trademark generalization could have a huge negative impact on a company. It must be avoided in all circumstances and brand owners can take cue from actions taken by Google and Xerox.