On forums relating to biker and military patches it's not uncommon for someone to ask a question about whether or not he can use company logos for his own custom patches. The answer to that is both yes and no. Allow us to explain.
Often times you'll see military patches with the insignia or logo of the specific military branch to which it's related. Use of those logos and insignias is completely legal because the US military is a public institution. All public institutions under the domain of the federal and state governments belong to the public, thus their logos and insignias are part of the public domain.
A similar scenario would be to use the logo of a specific property or service offered in the public domain; open source software is a good example of this. To understand how this works consider a South African company named Canonical.
Canonical is a software development firm that produces both proprietary and open source software. Perhaps their most well-known piece of open source software is the Ubuntu GNU Linux operating system (a.k.a. Ubuntu). As this operating system is open source and freely available in the public domain, Canonical is very liberal about the use of the Ubuntu logo. In most cases you simply have to send them an e-mail describing how you want to use it, and they will respond with approval.
Where you can't use company logos is when such logos are protected by copyright or trademark laws. Most large corporations trademark their logos to prevent just this sort of thing. They don't want people making money off their logos or attaching them to something that could make the company look bad. If you're caught selling embroidered patches with a trademarked or copyrighted logo you could face stiff fines and possible jail time.
