Hello and thank you for contacting us. This is Dwayne B. and I’m an expert here and looking forward to helping you today.
It's not "illegal" as in a criminal act but it certainly could be a violation of your copyright or your trademark.
A copyright is created automatically, but a trademark has to be registered. Registering a name with a city in Texas doesn't mean it is trademarked, to trademark something it actually needs to be registered with the US Trademark office.
However, if you have been using the name, it's not enough just to register it with the city and then not use it, you could go ahead and send in the trademark registration papers and as soon as you receive notice that it is has been registered then you can get a local lawyer to send them a "cease and desist letter" to demand that they stop using the name.
This is actually a very complicated area of the law. You can rigster the trademark yourself, hire alawyer to do it, or hire a service like www.legalzoom.com to fill out the papers for you.
You would want to check first to see if anyone else has registered the trademark before you spend any money trying to register it since if it is already registered then you won't be able to register it as well.
You can run a search at http://www.uspto.gov/trademarks-application-process/search-trademark-database
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