The Risks of Not Filing a Trademark Application: Don't Get Blocked

Imagine using a trademark for years, only to discover that someone else has registered the same mark for similar goods. A quick call to your lawyer reveals that while the other user adopted the mark after you, they had the foresight to secure a federal trademark registration, which is now incontestable. Not only can you not stop them, but they can now prevent you from expanding your business.

A prime example of this is the Burger King case. Burger King of Fla., Inc. v. Hoots, 403 F.2d 904 (7th Cir. 1968). Surprisingly, what we know as Burger King today was not the first Burger King. In 1959, the Hoot family opened a restaurant in Mattoon, Illinois and called it “Burger King.” They also filed for and were granted an Illinois state trademark registration. After the Hoots began using Burger King, what we now know as Burger King began using that trademark and obtained a federal trademark registration. The Hoots sued Burger King in state court and Burger King responded with a federal case. The Court ruled that Burger King’s federal trademark registration afforded it rights to the name across the United States, including Illinois, but excluding the 20 miles of Mattoon, Illinois where the Hoots’ family had prior use.

In today’s competitive marketplace, protecting your brand is more than just a legal formality, it’s a crucial business decision. A strong name, logo, or slogan distinguishes your company, builds customer trust, and fuels long-term success. Sleep on those right at your peril.

While trademark registration may seem like an unnecessary expense initially, failing to register your trademark is an assumption of risk that can lead to you losing trademark rights and expose your brand to theft, costly legal disputes, and even loss of business identity. While a slightly different negative scenario, imagine dedicating years to building your brand, only to receive a cease-and-desist letter and discovering that someone else has superior rights and registered the trademark first. Without the appropriate steps upfront, you could face expensive rebranding, lost customers, and legal battles that drain your resources.

We’ve seen first-hand, both large and small businesses encounter significant issues and setbacks due to “unforced errors” resulting from a lack of diligence and neglect of trademark research and protection (have I done all I can to protect my brand?). Whether it’s failing to: i. research availability of your chosen mark prior to using it; ii. Registering it; or iii. Expanding protection as use of the brand grows. The risks and consequences can be significant. Anticipating future growth and securing comprehensive trademark protection is the best way to protect your brand and avoid unnecessary pitfalls.

The Risks of Not Registering a Trademark

1. Lack of Legal Ownership and Exclusive Rights

A common misconception is that use of a brand creates ownership. In fact, without both a search and trademark Registration, a use of a trademark is on uncertain ground and absolutely does not necessarily have any rights, let alone exclusive nationwide rights to that brand.

  • Common Law Rights: While common law rights based on prior use in a geographic area offers some protection, they are temporarily and geographically restricted and subject to prior rights in others. In fact, without a federal registration, a business will struggle to enforce its brand rights beyond its actual geographic marketplace.
  • Nationwide Protection with Federal Registration: A federally registered trademark with the U.S. Patent and Trademark Office (USPTO) grants nationwide rights, making it easier to prevent others from using confusingly similar marks.

2. Risk of Brand Theft and Imitation

Without a federally registered trademark, businesses leave themselves vulnerable to theft, imitation, and dilution. Competitors, counterfeiters, or bad actors can easily adopt a similar or identical name, logo, or slogan, leading to consumer confusion and lost revenue, and in some cases, superior rights in the brand.

  • Trademark Squatting – Losing Control of Your Own Brand: Some entities exploit the system by filing for trademarks of established, but unregistered, brands, blocking the original business from using its own name.
  • Counterfeiting Issues – Damage to Reputation: Unauthorized third parties may produce knockoffs under your brand name, leading to inferior products, customer dissatisfaction, and a damaged reputation.
  • Inability to Block Infringing Uses: Some enforcement regimens, for example Domain Name disputes, require you to have a federally registered trademark to contest use of an infringing or damaging domain.

3. Legal Challenges and Costly Disputes

Failing to file a trademark application can lead to expensive legal battles, especially if another business registers a similar brand first.

  • Cease-and-Desist Orders – Forced to Stop Using Your Brand: If another company secures a trademark registration first, they can legally demand that you stop using what you thought was your brand name. This can be true, even if you were the prior user, leaving you to protection only in the geographic area where you are the prior user.
  • Rebranding Costs – A Costly Reset: Changing your business name due to a trademark conflict can be financially and logistically overwhelming, requiring new marketing materials, website updates, and customer re-education.
  • Lawsuits and Legal Fees – Financial Burdens: Trademark disputes often result in litigation, which is both time-consuming and costly. Without a registered trademark, businesses are at a significant disadvantage in legal proceedings.

4. Limited Expansion Opportunities

  • Without a registered trademark a business growing beyond its existing market will face challenges in each new market, market by market. Moreover, some expansion models, such as franchising and licensing, require federally registered trademarks. Similarly, potential partners and investors typically require registered trademarks as part of their agreements.

5. Weakened Brand Value and Market Position

A registered trademark enhances a brand’s credibility and market strength, while the absence of an ® can weaken a company’s brand and suggest a lack of sophistication.

  • Loss of Consumer Confidence – Eroding Trust: Customers associate registered trademarks with credibility and commercial success.
  • Decreased Business Valuation – A Risky Investment: Intellectual property, including trademarks, is a key factor in business valuation. Without trademark protection, potential investors and buyers may perceive your brand as a higher-risk investment. In fact, to the extent the company’s value is its brand, that value is illusory unless the brand is protected.

Conclusion: Protect Your Brand Before It is Too Late or Risk the Consequences

The cost of failing to vet and register your trademark far outweighs the upfront expense of registration.

Without proper protection, you risk:

  • Losing your brand rights
  • Expensive legal battles
  • Forced rebranding and lost customers
  • Market limitations and business devaluation

A federally registered trademark ensures:

  • Exclusive nationwide legal protection
  • Stronger enforcement options
  • Increased business value

Don’t wait until it’s too late—take the necessary steps to protect your brand today. If you’re unsure about the process or need assistance with your trademarks, contact McHattie Law Firm to ensure your intellectual property is protected.