If I take a sharpie and write 'Fender' on the headstock of another bass, no law has been broken.
If I take a Fender decal (real or good imitation) and stick it on the headstock of my bass, no law has been broken.
If I sell a non-Fender bass with a Fender decal on the headstock, but my advert states clearly that it is NOT a Fender, no law has been broken.
If I sell a non-Fender bass with a Fender decal on the headstock, and my advert states clearly that it IS a Fender, then that's - put simply - fraud, and yes, it is against the law.
Oh well, one out of four ain't bad.
Erm ... actually it iS bad.