As of today, Facebook is one step away from trademarking FACE

That's not what they're doing - they're claiming exclusive use of the word FACE in the restricted context of online chat and bulletin board applications. While I can think of a few groups that are innocent and may fall under this (bulletin boards that focus on the study of faces), for the most part it seems like anyone who's using that word in this context would be trying to poach off of Facebook's notoriety to increase the value of their brand.

It seems likely that Facebook is just trying to go as far as the government will let them.

Stop panicking. Trademark abuse is not unheard of, but if anything we technologists grossly overestimate how often it actually happens because we've seen domain names getting "stolen", for various values of stolen, by claiming trademark ownership over domain names. (And for that matter, much of the "trademark abuse" is really ICANN abuse rather than trademark abuse, it's really ICANN's decision. If they take the domain name because of a bribe or even "just because", you still wouldn't be able to do much.) But it's actually an importan aspect of the law, and even if you're of a mind to throw out patents and copyright entirely, you really need to stop and think some more about throwing out trademarks. What a trademark boils down to is a mark that allows you to identify when you are dealing with an entity. Trademark violation is when you mark yourself in such a way as to cause people to confuse who you are. There's hardly a model of society I can think of from the rabid left to the rabid right and all the things that don't fit on that scale where it's actually desirable to let entities falsely masquerade as other entities. Most of them are actually so deeply built on being able to identify the people you are dealing with that you can't hardly even see it any more, it's just part of the background fabric.

And yes, Lamebook and Facebook are very confusable. Don't ask your tech savvy friends, just take a picture of the two websites, go somewhere that isn't a tech hub, stop ten people on the street, and ask them if these sites look like they are from the same company. You'll get your answer pretty quickly, I think. Companies spin off subbrands all the time.

(And read the link carefully for what it says, not what you think you can twist it into if you read certain words in certain ways. Remember, your arguments don't have to convince me, or convince some pathologically stupid AI, they have to convince a human judge, who has spent the past twenty years listening to people trying to twist and bend the text of the law in their favor.)

A trademark is not a copyright. It is not "claiming ownership". It doesn't mean that you have to pay facebook royalties every time you utter shock at how ugly you are when you look in the mirror.

A trademark is a brand, and because of all the things that come with a recognized brand, it is imperative that a business be allowed to operate without every two bit imitator confusing customers by making (possibly inferior) products that look and feel like an authentic experience.

My only wish is that the outraged do some reading.

http://en.wikipedia.org/wiki/Trademark

They aren't restricting the use of the work "face", they are claiming ownership of the exact way that particular brand is represented, hence the image.

Then again, I can't imagine a company better equipped to go to war over trademarks than Apple.