Trademarks — which can include words, phrases, symbols, designs, or a combination of these things — play a crucial role in establishing and protecting a brand’s identity: they help ensure that consumers can reliably identify the origin of a product or service, which can build brand loyalty and trust. A trademark (or service mark in the case of services) is the legal concept of a brand or “customer goodwill.” (For simplicity, I’ll use “trademarks” to refer to marks on goods as well as marks on services (“service marks.”)

But did you know that trademarks can exist with and without registration? Understanding the differences between these two statuses of trademarks where your business operates is essential for effectively managing and protecting your brand. And where your business operates and the brand is used matters because some countries, such as the U.S., recognize unregistered trademarks more than others.

Here’s an in-depth look at registered and unregistered trademarks and their implications for your business under U.S. trademark law.

What is an unregistered trademark?

An unregistered trademark is actually the brand that virtually every business has as soon as it opens for business and starts offering products and/or services that its customers identify under that brand. Unregistered trademarks are protected in the United States under “common law” rights. Simply using a mark in U.S. commerce automatically establishes these rights. Common law trademark rights are based on the principle of “first to use,” meaning that the first entity to use a particular mark in commerce has the exclusive right to use that mark on its particular goods/services within the geographical area where it has been used and that right is superior to any subsequent similar business who might want to use that mark or a “similar” mark.

Businesses may use the ™ symbol (note that service businesses use an ^SM symbol) to indicate that they consider a mark to be their trademark, even if it is not registered. This symbol provides notice to others of your claim of exclusive rights to the trademark.

There are two key benefits with unregistered trademarks: cost and immediate use. Unregistered trademarks do not require the expense or time required for the trademark registration process; they simply require affixing the mark to the goods or using the mark to advertise the services in U.S. commerce. However, enforcing an unregistered trademark can be more difficult and costly and may not even be possible in many countries that do not recognize common law trademark rights. Common law trademark rights are generally limited to the geographic area where the mark is used, meaning that protection is not nationwide. Moreover, it may be more challenging to enforce rights against infringers with a common law mark. In the event of a dispute, the burden of proof lies with the trademark owner to demonstrate that the mark has been used in commerce and has established a reputation in the area of use that refers to the owner of the mark. The registration of a mark alleviates this burden by providing some of this proof, namely the ownership and validity of the mark.

Unregistered trademarks can be a good starting point for new businesses or those operating in a limited geographic area. However, registering your trademark becomes increasingly important as your business grows, its market expands, additional investors or partners are desired, and the mark might be licensed to other businesses or used outside the U.S.

What is a registered trademark?

A registered trademark is a mark that has been formally registered with the United States Patent and Trademark Office (USPTO). This process requires a thorough legal examination of the mark by a federal government attorney, takes about a year or more to complete, and provides legal notice to the public of your claimed trademark rights. Registered trademarks offer comprehensive protection and greater enforcement capabilities precisely because of the legal notice to the public, making them a worthwhile investment for safeguarding a brand’s identity and value.

Registered marks can be a valuable asset, enhancing the overall value of the business and providing leverage in licensing and franchising deals because of the greater enforceability of a registered mark. Mere use of the ® symbol, permitted only once a trademark is registered, can deter potential infringers because it signals that the trademark is registered as well as because a registered trademark comes with a formal registration certificate that can be presented to an alleged infringer and is usually revered and respected by those infringers.

Another important advantage justifying the registration of a mark is that registered trademarks offer nationwide protection in the country of registration, regardless of the geographic area of actual use. Registration also provides a legal presumption of the trademark owner’s exclusive right to use the mark, which is the additional proof the law provides that makes enforcing one’s trademark rights easier to pursue. Lastly, a registered mark usually has its chain of title recorded in the trademark office where it is registered (e.g., the USPTO), which facilitates business transactions such as obtaining loans secured by the registered mark and attracting business investors and partners who will feel more secure about their investment in the business knowing that the registered mark is a clearly documented business asset.

Choosing the right intellectual property protection for your business

This article is not an exhaustive list of all of the advantages and disadvantages of registered and unregistered marks, but it clearly illustrates that registered trademarks offer valuable protections for businesses, though the level and scope of trademark protection vary significantly for businesses, depending upon their particular circumstances. Understanding the differences between these statuses of a mark can help businesses make informed decisions about protecting their intellectual property.

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