Essentially, the difference between a registered trademark, designated by the symbol ®, and a trademark, designated by ™, is the word "registered." A registered trademark has been officially registered with the United States Patent and Trademark Office (USPTO) or its foreign equivalent. A trademark (™) may be in the process of becoming registered with the USPTO, or it may never be. There is no current law requiring a company or inventor to obtain a registration for their product lines, but replacing a ™ with a ® does offer more legal protection.
The difference between the two is somewhat similar to a copyright or a patent. Once a piece of art is painted or a written work is printed, for instance, it automatically receives copyright protection. In this same way, any new product with a distinctive and unique name can be considered to be trademarked, in the ™ sense at least. A company can put out a new line of baseball bats called "Sluggos," for example, complete with a graphic of a large baseball player. The graphic and the name Sluggos would be considered a trademark, and the company could put the ™ designation on it immediately.
The problem with not registering a trademark, however, lies in the competitive nature of business. Another baseball bat company could also produce a bat called "Swaggos" or even "Sluggos" and use a very similar graphic of a baseball player. While the first company may have some proof that their bats were marketed first, they may not be able to prove infringement since they did not register the trademark with the USPTO first.
A registered trademark, on the other hand, would provide the original baseball bat company with much more legal protection. Once the trademark is fully processed by the USPTO or foreign trademark offices, it can display the ®. The second company would have been able to research the USPTO's archives to determine if their own suggested trademark were legally available. Since "Sluggos" with the distinctive graphic would have appeared as registered, the second baseball bat company would be compelled to select another name and design.
A trademark designated ™ is a notice to others that the product's name and design are the exclusive property of the company, but a registered trademark ® provides notice that it has indeed been registered. Only a legally registered one can be represented by the ® symbol, and even then it must be renewed after a number of years to continue enjoying legal protection.