A difficult subject... If you have any intentions of misrepresenting your car as an m3 or m5 thats a no-no. The M3 connotation while similar to the "M" is different. The M literally means the Motorsport division but it is also an "Idea" of performance over stock trim levels. As such having an "M" is ok (I wouldn't do it on a stock 318 but modified maybe..) as its just paying homage to the motor sport division and to performance. One thing no one should EVER do is put an M or M3 as a replacement trunk badge to many people fake m3's for me to even want to venture into that territory.
If you put an M badge to the trunk, it should not necessarily mean you re posing as M3. For instance, I put an M logo on front grille and trunk just because I have an M steering wheel, M shift knob, M Tech II kit, M seat pins (all original OEM).