A trademark that has not been registered with the United States Patent and Trademark Office is known as an unregistered trademark (or at any of the state trademark offices). Owners of unregistered trademarks, on the other hand, have legal rights in the territories where they operate. Because they are protected by state-based unfair competition laws, these are commonly referred to as “common law” trademarks.
In some cases, an unregistered mark can prevent a subsequent federal user in the same geographic area from using it. A larger corporation going into a region, on the other hand, may not be able to prevent a smaller competitor (whose use precedes the big company) from adopting a similar name. (As a result, Norman McDonald was permitted to keep his name on his hamburger shop in Philpot, Kentucky, even if his copycat arches had to be removed.)
Rights Concerning Unregistered Trademarks
Unregistered mark laws are based on a common-law English business principle: if someone draws customers (known as “consumer goodwill”), it is unfair for someone else to falsely pass off similar goods or services. Not only would such behavior be detrimental to the first company, but it would also cause consumers to be confused regarding the origin of the items.
Consider the case of a jeweler store called “Precious” in a small town that sold earrings and bracelets. Customers came from the town itself, as well as visitors and others from all around the state. The store never bothered to register the name “Precious,” but it did business under it for decades.
Imagine a new store opens down the street with the same name as “Precious.” Customers who incorrectly concluded the second Precious was the original or tied to it would undoubtedly abandon the first Precious. Furthermore, clients would be injured, especially if they acquired jewelry that was of lower quality than the things they expected to receive based on the original store’s stellar reputation. Everyone would lose, with the exception of the new store, which would benefit from the original’s goodwill.
Fortunately, even if the first store does not have a registered brand, state common law and state statutes will almost certainly provide some protection. Unfair competition laws or unfair business practices are two terms used to describe this state legislation. Dilution laws can protect well-known unregistered trademarks. (Note that some functional regional trademarks may not be eligible for registration since they are not used in federally controlled commerce, such as interstate commerce.) Even if a trademark isn’t registered, these protections persist.
Limited Rights for Unregistered Trademarks
An unregistered first user of a trademark can frequently assert trademark rights within the relevant geographic area, as previously stated. This means that, while the first “Precious” business may be able to prevent a second “Precious” from establishing in its town, it will be unable to prevent a second “Precious” from opening in Hawaii, New York, or Florida. It also has no power to prevent a second Precious from creating an Internet domain or selling things under the “Precious” moniker on the internet.
While unregistered trademarks have certain limited protections, for most firms, it is advisable to register your trademark if at all possible. This guidance is especially important if you plan to grow by opening new sites or doing business outside of your current town or municipality.
This advice is especially essential in light of the Internet’s development, which has put many previously local or regional firms in direct competition with national corporations. Furthermore, registration is increasingly a typical practice among entrepreneurs, who see it as a way to offer value to their equity investors. Both domestically and internationally, registration allows for more stringent brand enforcement. There are clear benefits to registering with the United States Patent and Trademark Office. However, you must first prove that the trademark is genuinely in use before you can register it. Registration is granted and strengthens your already-existing trademark rights if your examiner is satisfied that you have a working trademark in use in the marketplace. Registration gives the owner a presumption of ownership, gives other corporations in the United States constructive notice, and gives the owner the hope of incontestability (after a few years). In the event of a willful infringement, registration may increase your cost.