If you used the mark in commerce prior to the point at which the other
party applied for federal registration, you may be able to continue
using your mark within the same geographic region you have always
used it, notwithstanding the federal registration. In other words, you
may well have developed common law rights in the mark and, to that
extent, have "priority" under federal law. That would not mean that you
could expand use of your mark into other geographic regions. (The
registrant would have priority there.) But you wouldn't have to contract
the region in which you use it, either.
So, no, the matter isn't hopeless, but it is not absolutely clear to me
that you have rights, either. You really need to retain a trademark
lawyer to review the situation in detail and advise you further. Priority
issues are an area in which I have considerable experience, but you
have to decide whether it is worth it to you and your business to pursue
Disclaimer: This answer by itself does not establish an attorney-client
relationship or constitute legal advice. It is for general informational purposes
Q: If I hire a trademark attorney at this point, how likely is it that I'll be able to overcome the USPTO attorney's refusal?
R: No one can tell you w/o evaluating your mark, the mark being cited against your application, and the goods or services that the two of you are branding with your marks. Marks that sound the same or similar when spoken are often confusingly similar when used to brand related goods.
Q: Would it help if I can prove that my name was in use prior to the point in time that the registered name applied for trademark registration?
R: My colleague has already very ably answered your question.
I would only add that if the mark you're using is quite important to your business then, if you truly used your mark first and if the two marks are truly confusingly similar in the marketplace, you can petition the Trademark Office to cancel the other person's registration for its mark. The rule is that the first to use a registrable mark in interstate commerce has the right to federally register the mark. If someone falls asleep at the switch and does not register its mark before a junior user registers the same mark, that sleeping someone may petition to cancel the registration.
As a practical matter the threat of a meritorious cancellation proceeding often results in the two parties agreeing to concurrently use the mark in different geographic areas and with other marketing divisions.
If your mark is important you need to speak with a trademark attorney. If it's not, let the registration application go abandoned. If the Trademark Office is right, however, in that your mark and the other mark are confusingly similar, do not be surprised if one day the other mark owner sends you a cease and desist letter.
One more thing, speak with your trademark attorney about registering your mark in the State trademark offices where you do business. State registrations are very handy.
My colleagues have cover the subject matter well. I would add that it is a business decision. You can always change your mark and invest in developing your business under this new name. In any case, an intellectual property attorney can assist in guiding you through this process to be sure the new mark does not cause similar issues for you.
Good luck and if you need assistance, I certainly can help.
Disclaimer: This answer does not establish an attorney-client relationship and does not constitute legal advice. It is for general informational purposes only.