I was wondering if you could tell me if character names are protected under copyright or trademark laws. For example, I'd like to use the name Bilbo for the family dog in my book. I do mention that the father collects Lord of the Rings memorabilia, so there is a connection/tie-in to the original source, but is this still grounds for copyright or trademark infringement?
I've been trying to research this, and everything I've found says that, unless I portray the character as a hobbit, confusing the two works, it should be OK. I also looked up the name using the Trademark Electronic Search System, and while there are a number of trademarks related to the name, those are for goods and services and not fiction.
What are the rules regarding this when it comes to fiction? Especially if the book is being sold commercially?
You can use a character name, but probably not the character.
So, the dog named Bilbo is fine. Putting in a hobbit named Bilbo, not so much.
You'll see references to the actual character Jack Reacher in books written by someone other than Lee Child. Alafair Burke's Samantha Kincaid sleeps with Reacher; Lee Child references Samantha in a book as well.
This works because the intent is homage, and fun. If Lee Child had objected and threatened to sue, he would have had to show damage of some kind; that using Jack Reacher as a character confused readers who thought they were buying a Reacher book only to end up with a NOT-Reacher book. Hard to imagine anyone confusing the two authors since they have not only different names, different publishers, and different styles, but who the hell knows about lawsuits anymore.
Create a sweet, kind, soft-spoken, clean-living, temperance advocate agent who apologetically burps unicorns after eating lettuce and tofu, then name her Janet Reid, and you're going to be hearing from me in ways you won't like. It's not just cause you used my name, it's cause you used my name, job AND described me in ways that would tarnish my reputation. I mean really, BURPING?? Not to mention that other stuff. I'd be laughed out of the World Domination Cloakroom and Plotting Center if they heard I ate lettuce.
Bottom line: From what you describe, you're going to be fine.