1. Explain whether or not the fact that Gabby’s surname is Rally gives her the right to use it any way she wishes.
The fact that Gabby’s surname is Rally, doesn’t give her the right to use the name any way she wishes, especially in commerce. In this case, the name Rally is registered for Rally Motors and protected under the trademark law. Using the name Rally for Gabby’s pizzeria is an infringement of the trademark law.
Trademarks are an intellectual property that grants the exclusive rights to the owner and governed by state and federal law in the U.S. In order to serve as a trademark, a mark must meet one of the requirements as follow:
• Arbitrary or fanciful mark
Mark has to bear no logical relationship to the underlying product.
• Suggestive Mark
Mark has to evoke or suggest a characteristic of the underlying goods.
• Descriptive Mark
Mark has to directly describes, rather than suggests, a characteristic of the underlying product.
• Generic Mark
Mark has to describe the general category to which the underlying product belongs (Harvard Law, n.d.).
Rally is the mark that bears no logical relationship to the car dealership services and products. Therefore, Rally is categorized as arbitrary or fanciful mark.
2. Explain whether or not it matters that Rally is associated with pizza.
The point to this question is will it be any effects of the association of Rally trade name, who is an auto dealership, to a pizza shop; is there any marketing benefit for the pizza shop to have the same name as the Rally Motors? Does it harm Rally Motors?
First of all, we have to see the fact that Rally Motors a largely advertized in the same area as Rally Pizza. Rally Pizza would certainly be benefited from those advertisements since the name Rally, are associated the two different companies with one another. People are likely to think of Rally Pizza when they listen or read the Rally Motors advertisements.
According to the U.S. Code, “the use of a trademark in connection with the sale of a good constitutes infringement if it is likely to cause consumer confusion as to the source of those goods or as the sponsorship or approval of such goods” (Harvard Law, n.d., para. 7). The factors that affect the consumer confusion included; the strength of the mark, the proximity of the goods, the similarity of the marks, evidence of actual confusion, the similarity of marketing channels used, the degree of caution exercised by the typical purchaser, and the defendant’s intent (Harvard Law, n.d.).
As stated by the Rally Motors employee, Shelly, the dealership gets all sorts of calls for pizza and that people are confused about the names. This proves the infringement and dilution of the Rally Motors trademark by Rally Pizza.

3. Explain how important the fact is that Herman started to use the name Rally first in that particular geographical area.
It is important that Herman started to use the name Rally first in the particular geographical area. In this case, Herman’s auto dealership has been using Rally as it trademark far before the Rally Pizza exists. Therefore, Herman owns the trademark protection for the name Rally. The fact that Gabby’s surname is Rally doesn’t make her automatically own the right to name her business entity Rally.
According to the U.S. Code, trademark can be acquired in one of two ways:
(1) by being the first to use the mark in commerce; or
(2) by being the first to register the mark with the U.S. Patent and Trademark Office ("PTO") (Harvard Law, n.d.).

4. Explain what rights you have in your trade name.
Assuming that the qualify trade name has acquired its secondary meaning, as required in descriptive marks, the trade name is entitled to trademark protection. Another way to earn the right of trademark protection is to register the mark with the United States Patent and Trademark office. This registration will ensure the right of the trademark owner to the mark nationwide, even if actual sales are limited to only a certain area. The registered trademark right is limited to the specific geographical area where the trademark hasn’t already been used. If there’s an existing same trade name under a commerce trademark protection, the registered trademark protection will not cover those areas.
The owner of the trade name has the right to use the name to distinguish their services and products from others. They are entitled to sell services and products to the public with the mark attached. State and Federal law protects the trade name so that other businesses are not allowed to use the same trade name at places that covered by the trademark protection.
5. Explain what remedies you have if someone else infringes upon your trade name.
If someone else infringes upon a trade name that is protected by trademark law, the owner of the trade name can initiate a lawsuit. Assuming the plaintiffs have won the case, as the result, the defendant must give up using the trade name in their business to avoid further infringing or diluting use of the trademark.
According to United States Code, monetary relief is available for the plaintiffs, including:
(1) Defendant's profits,
(2) damages sustained by the plaintiff, and
(3) the costs of the action (Harvard Law, n.d.).

References

Halbert, T., & Ingulli, E. (2009). Law & ethics in the business environment: 2010 custom edition (6th ed.). Mason, OH: South-Western Cengage Learning.
Harvard University Law Department. (n.d.). Overview of trademark law. Retrieved September 04, 2010, from http://cyber.law.harvard.edu/metaschool/fisher/domain/tm.htm