I'm going to begin by saying it is not about defeat at all. It is about humbly admitting to an inability to complete the task he is trying to undertake.
But let's start with why defeat may be the answer. You have to look at the last six lines, beginning with "Often already have I sought to sing." It tells us that he is well equipped to deal with poetry and the problems about writing love sonnets. So that line does not suggest defeat. Now comes the problem: as he progresses, he finds that the song he wants to sing has stayed where it is locked away in his heart (chest) where it cannot be heard. He's tried. The tender verse has been written (essay'd), but it does not come out the way he would like. Nothing works. His pen hand and intellect are all locked in a mute silence (my words).
But is any of this defeat? No, I would say. He just can't do what he's set out to do. Defeat is giving up. Momentary inability is just not being able to solve the problem. He feels his tools are inadequate. And yet, the first eight lines tell us why.
Look at that 2nd line. Wouldn't you like someone to say that to you? Perhaps not, but I'm sure she was not repulsed by it. She is so astonishingly beautiful in his eyes that he is made silent (first line).
No one else possesses her beauty (fourth line). He's locked away in frozen terror by even trying 8th line. The lines I have not discussed (like the frailty of the mind [polished and sublime] are inadequate. She is just to gorgeous.
Though we may not like that kind of poetry, it was a style of the 1300s. The idealization of women and their beauty (even if they were not beautiful), was a sort of trend that was quite common.
