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An unregistered trademark is a unique mark used to identify goods in commerce. It relies upon common law rules regarding actual use and territoriality to confer exclusive ownership rights in the mark rather than registration with a governmental entity. Under common law, an owner of words or symbols that uniquely identifiy his goods in the marketplace automatically has exclusive rights to the mark as long as he could show he was the first to use it. There is no requirement that the mark has to be registered with a central agency for those rights to be enforceable, but the scope of the trademark is limited to the product’s distribution area.
Trademark rights are dependent upon the intellectual property laws in each country. Although most countries maintain a central repository of trademark registrations and have established both a registration process and legal remedies for infringement by statute, registration is not required to obtain basic rights. In countries with legal systems based on English common law, an unregistered trademark is defendable as long as it can be proven to be unique and was used in commerce before any subsequent infringer.
An unregistered trademark has a significant limitation in that rights in the mark are typically restricted to the mark’s area of influence. If the trademarked product is only distributed regionally, the right to use the mark is only effective in that region. The owner of an unregistered trademark that was good in one region can't sue someone for infringement for using the mark in another territory where the original owner’s products aren’t yet distributed. In fact, the second party would be able to prove first use in the new territory.
Globalization has greatly lessened the practical value of an unregistered trademark for any product that plans to expand its distribution over time. Relying upon common law trademark rights leaves the mark vulnerable because protection follows distribution, and a savvy infringer can jump ahead of distribution and tie up rights in a mark in a territory that the product has yet to reach. Registration provides automatic protection in an entire country, whether or not the mark has been used in commerce in every single region.
The international trend in intellectual property law is to allow trademark registrations in one country to be effective in other countries. This further lessens the value of an unregistered trademark. If one registration can provide near worldwide protection for a mark, there is little reason for a mark to remain unregistered. Common law rights would merely be a stopgap that would provide some protection until an official registration could be completed.
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