To quote my buddy Nick: I am no lawyer either...
But as I recall, having read the trademark laws some time ago, it boils down to this:
The trademark laws are designed to protect companys from the use of their names in a way that creates confusion in the mind of the marketplace. If it is causing confusion, it is in all likelihood, trademark infringement.
That said (and owing to the fact that I am not a $10 an hour or any variety thereof lawyer), your friend's business is producted by commonlaw rules which if he does not act to protect them, will be forfeited because he did not act within those laws to claim them. (Again, I am not a lawyer -- I am merely basing this on cases I have seen here in California and elsewhere).
Just my two centavos,
Ron Lindeboom