by Traverse Legal, reviewed by Enrico Schaefer - September 21, 2025 - Trademark Basics, Trademark Law
Building a brand requires protection as much as it does a logo or product name. One of the first legal questions founders face is whether trademark law is handled at the state level, the federal level, or both. The answer governs the security of a brand and how far the protection reaches.
A state trademark may be sufficient for a business not planning to cross state lines. However, companies with national or online reach need federal registration for broader rights, stronger coverage, and meaningful enforcement power.
This article explains the differences between state and federal trademark law, their interaction, and how business owners can decide a path to guide their growth strategy.
Trademark law operates on two levels. States maintain local systems, while federal law secures nationwide protection.
Business owners face three options: rely on state registration, pursue federal registration, or claim common law rights through actual use without formal filing. Each option carries distinct limits on scope, enforceability, and cost.
Consider a bakery selling only in one city. State registration may be enough to block other businesses in the said state from using a confusingly similar name. However, a tech startup selling software nationwide gains little from state protection. A federal trademark covers all fifty states, provides nationwide notice of ownership, and grants access to federal courts for enforcement.
Understanding this dual system and the overlap between the two levels is the first step in choosing the right strategy for your brand.
State trademark law protects a brand only within state borders. Registration is handled by a state’s Secretary of State or similar agency, and the process is relatively quick and inexpensive compared to federal filing. For local businesses with no interstate activity, this limited protection can provide a practical first layer of security.
State registration is quick, inexpensive, and relatively simple. In many states, approval takes only a few weeks, and the fees are a fraction of what you’d pay at the federal level. Because the paperwork is straightforward, small businesses can usually get protection in place without wading through the more technical USPTO process. A boutique coffee shop with a single location may find state registration sufficient to secure its name within the local market.
The drawbacks are substantial. Rights end at the state line, leaving a brand vulnerable as soon as it expands or sells across borders. State registrations also lack the presumption of ownership coming with federal filings and do not appear in the USPTO’s database, meaning competitors in other states may unknowingly adopt the same mark.
The Burger King dispute in Illinois highlights these limits. A family-owned restaurant in Mattoon registered “Burger King” with the state before the national chain arrived. The state registration preserved rights only in Mattoon. The federal registration held by the chain prevailed everywhere else. This case illustrates how state rights shrink in the face of federal protection.
For businesses with growth ambitions, state registration alone rarely provides the security needed to protect a brand.
Federal trademark law offers the widest net of protection in the U.S. It’s built on the Lanham Act and managed by the U.S. Patent and Trademark Office (USPTO). Unlike state filings, a federal registration covers all fifty states and U.S. territories in one stroke. For a company selling online, shipping across borders, or gearing up for national growth, this is the tool securing the brand.
A federal registration comes with real weight. It creates a presumption one owns the mark and have the exclusive right to use it across the country. This starting point makes a huge difference in court, where federal registrants can also pursue broader remedies than state law allows. Because every federal registration is searchable in the USPTO database, it also puts potential infringers on notice before they get too close.
Another advantage many businesses overlook is international reach. A U.S. registration can serve as the foundation for filings abroad, giving companies a clear path to expand their brand into other countries. For tech startups, e-commerce brands, and anyone with a global audience, this leverage is often essential. Even smaller businesses gain credibility and deterrence value by holding a federal mark.
The USPTO process is much tougher than a state filing. Every application is assigned to an examining attorney who checks whether the mark meets federal standards and conflicts with existing registrations. If it clears the review, the mark gets published so third parties have a chance to object. The whole process usually stretches over a year, but the payoff is a registration carrying far more weight in enforcement.
Federal registration also creates a public record. Because every approved mark is listed in the USPTO database, other businesses can see your rights before they commit to branding. Such a notice alone can stop conflicts before they start, and with this, the transparency protects registrants and promotes fair competition.
Trademark rights can arise without registration through consistent use in commerce. Common law trademark rights protect a business only in the geographic area where the mark is used and recognized by consumers. A restaurant with local recognition can block nearby competitors from using the same name, even without registration.
But these rights are narrow and hard to enforce. They don’t appear in public databases, offer no presumption of ownership, and don’t support federal court claims. Enforcing them requires proof; sales records, marketing, and customer recognition, making disputes expensive and uncertain.
For businesses with growth plans, relying solely on common law protection is risky. Registration, whether state or federal, offers a far stronger foundation.
While both systems aim to protect brands, the differences are significant.
State trademarks protect only within state lines. Federal registration extends protection nationwide, including U.S. territories. For companies selling across borders or online, the broader scope is essential.
Federal trademarks create a presumption of ownership and validity, making them far stronger in court. State trademarks lack this presumption and can be overshadowed by later federal registrations. The Mattoon “Burger King” case is a prime example, where state rights survived only in a single town, while federal rights prevailed across the country.
State systems are simple and quick, involving a short form and modest fee. Federal applications require detailed filings, attorney review, and an opposition period. The process is longer and more complex, but the resulting protection is far stronger and more durable.
The ™ symbol can be used with any mark, registered or not. The ® symbol, however, is reserved exclusively for federally registered trademarks. Seeing ® signals nationwide brand protection backed by federal enforcement power.
Since trademark rights exist at both the state and federal levels, it raises a common question: Does federal law override state law? In practice, federal registration delivers broader, stronger rights, but it doesn’t automatically nullify a valid state registration. The two systems coexist, and when they clash, federal rights usually prevail.
A state trademark grants rights within state borders, but those rights are narrow. If another business later obtains a federal registration for the same or a similar mark, the federal registrant gains nationwide protection. The state holder stays confined to its existing territory. This dynamic was highlighted in the Burger King case from Illinois: the local restaurant with a state registration was allowed to continue using the name within its town, but the federal registrant, the national chain, retained the right to expand everywhere else.
The practical effect is federal law often overshadows state law in trademark disputes. Federal registration establishes nationwide notice, creates a presumption of ownership, and provides access to federal courts. State law cannot override these advantages. At most, a state registration may preserve local rights for businesses who were first to use the mark in a particular area.
For entrepreneurs, the takeaway is clear. State registrations offer limited, local protection. Federal law governs trademark rights at scale. If your business crosses state lines or plans to grow, state law alone will not hold the line.
Choosing between state and federal trademark protection depends largely on the scope of your business and its long-term goals. Both systems serve important purposes, but the right choice comes down to whether your brand is built for a local market or positioned for broader growth.
A state registration can be the right fit for small businesses with no intention of expanding beyond their local area. For example, a family-owned bakery selling within a single city may find a state protection giving them the security they need without the costs or complexity of a federal application. The same is true for businesses in industries currently not qualifying for federal protection, such as cannabis companies. Because marijuana remains illegal under federal law, many cannabis businesses rely on state trademark systems to secure their branding within states which have legalized their operations.
State trademarks can also provide a practical first step for new businesses wanting some form of legal protection while they test their market. In these cases, the lower cost and faster approval timeline make state registration an appealing short-term strategy.
For companies with growth ambitions, however, federal registration is almost always the stronger choice. A federal trademark offers nationwide protection, creates a presumption of ownership, and provides powerful enforcement tools in federal court. It also prevents conflicts by putting others on notice through the USPTO’s searchable database. Perhaps most importantly, federal registration can serve as a springboard for international filings, giving startups and established companies alike the ability to expand globally with confidence.
Consider the difference between a local restaurant and a fast-growing e-commerce brand. The restaurant may be secure with a state registration if its business never moves beyond its home city. But the online retailer, whose sales naturally extend across state lines, needs federal protection from day one. In today’s interconnected marketplace, where many businesses operate online from the outset, federal registration is both beneficial and essential.
Choosing between state and federal registration is less about paperwork and more about where you want your business to go. A company rooted in one city may get by with state protection. However, most businesses with an eye toward growth will need the strength and reach of a federal registration to truly safeguard their brand.
For startups and growing companies, the decision between state and federal protection is a strategic call. State registrations have their place, especially for local operations or industries restricted under federal law. Yet for most companies, federal registration remains the gold standard. It delivers nationwide coverage, stronger enforcement, and a platform for scaling with confidence.
At Traverse Legal, we work with founders, investors, and established businesses to design trademark strategies matching their ambitions. Whether weighing state versus federal filings, looking to secure unregistered common law rights, or preparing to expand internationally. Our team helps business owners protect their brand every step of the way.
Your trademark is one of your company’s most valuable assets, and you have to protect it with the foresight and precision it deserves.
Contact Traverse Legal today to secure your brand and move your business forward with confidence.
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As a founding partner of Traverse Legal, PLC, he has more than thirty years of experience as an attorney for both established companies and emerging start-ups. His extensive experience includes navigating technology law matters and complex litigation throughout the United States.
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This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by attorney Enrico Schaefer, who has more than 20 years of legal experience as a practicing Business, IP, and Technology Law litigation attorney.
