I am an intellectual property attorney by day and a leatherworker by night. Although my focus is on patents, I took plenty of trademark classes in law school and counseled several non-profits regarding the protection of their trademarks. Some of what's been said on here is good, some is not, so here's a little info to clear things up.
There are state law trademark rights and federal rights, although they are generally similar (it varies state by state, but states generally follow the federal system). The basic idea and purpose of a trademark is to protect the consumer (NOT the trademark owner) from being confused about the source of their goods and services. Trademarks can be anything, a word, a picture, even a color if it becomes distinctive enough (the one I can think of is that pepto-bismol-pink brand of insulation, there was a court case about it, it's distinctive so people recognize it and they can stop others from using it). Trademarks are specific to the class of goods they are used for (think Diamond brand cashews and Diamond brand multimedia corporation, the computer company - they can coexist because nobody is going to think the Diamond computer company suddenly started selling tree nuts). Trademark rights are also geographically based - one state's law does not apply in the other states, federal law applies in all of the US and her territories but not outside (although some other countries recognize US rights by treaty). Just remember, all of trademark law go back to one question - whether or not a consumer will be confused about the source of the goods and services they buy.
Most states and the federal government recognize at least some limited rights as soon as you start using a name in commerce because that's the moment consumers start associating your goods with your name. A lot of trademark disputes come from arguments over who is the senior user, meaning who is the person that used the name first, and therefore has the strongest claim to the name. You get stronger protection the more unique your name is, so made up names get nearly the strongest protection (Kodak film & Xerox copiers get strong protection, Bill's Bait Shop gets basically no protection). Some trademarks become so strong that you just can't use them for anything else (no Coca-Cola Shirt Co., even if they didn't already make shirts). But the difference between common-law trademark rights, the kind you get as soon as you start using a mark, and registered marks are significant.
You can register a trademark on your own, and it's not particularly expensive, about $425 for a federal registration last I checked. Going with a lawyer is usually your best bet, not because you couldn't figure it out yourself but because unless you're careful you can describe your mark wrong and end up without the protection you thought you had and it's better not to be your own guinea pig in that situation. And there's no magic percentage difference you can use to make your mark different from someone elses - the question is whether people would be confused about the source of the goods you're selling.
So what does this mean for your average leatherworker who wants to make a buck selling his or her goods? Well, I'm not your lawyer so I can't give you specific advice. But generally you should avoid using someone elses name if you know about it. Most of the time a local joe isn't going to sue some other leatherworker in a different state who is using the same name, and he probably wouldn't win even if he did. But lawsuits take money, and you don't spend it unless there's more money on the line with your mark.
Once you start using a name, you've got protection for it, unless someone else was using it first. Before you decide on a name, spend a little time coming up with a distinctive name, the more arbitrary the better (Apple Computer, for example). Look around to see if anyone else is using the name in the area you want to sell your goods. Be ready to change your name if you need to. It doesn't hurt to check the national trademark register at www.uspto.gov for any national companies who have registered their marks (you don't want to go naming yourself Saddleback Leather Co., because The Saddleback Leather Co. is going to have problems with that, even if you're a small leatherworker in down-home Idaho). You DON'T need a business license or registration to get a trademark, unless your state has some requirement to get state law trademark rights. If you're going to try to sell nationally, it might be worth checking things out with a lawyer to make sure you can get the federal protection you'll want. And don't use the little circle R on anything unless you have a federally registered trademark. Unregistered trademarks use the small caps TM.
I'll try to post some more general info later, but that should give everyone a basic handle on how trademarks work.
