A Frenchman who claims to have invented the yellow smiley face back in 1968 is opposing the US retail giant's move.
For some, the image is a reminder of 1970s counter-culture, for others, a useful shorthand when sending e-mails.
But since 1996, Wal-Mart has used the image in the US on uniforms and promotional signs, and it wants sole rights to it in the US retail sector.
Franklin Loufrani - just one of a number of people who profess to have invented the image - has marketed the sign since the early 1970s.
It's a mark that we have a tremendous investment in and is very closely identified with our company
He and his London-based company SmileyWorld today own the rights to the logo in more than 80 countries around the world.
The US is not included in this list, and SmileyWorld and Wal-Mart are now at loggerheads before the US Patent and Trademark Office.
A final decision is expected in August.
Until now the smiley face had been considered in the public domain in the US, and therefore free for anyone to use.
Wal-Mart spokesman John Simley told the Los Angeles Times that it had not moved to register the trademark until Mr Loufrani had threatened to do so.
"It is kind of ironic that this whole dispute is about a smiley face," said Mr Simley.
"But in the end, it is what it is: it's a mark that we have a tremendous investment in and is very closely identified with our company."
SmileyWorld said it did not have anyone who could comment on Monday.
The authorship of the smiley face is hotly disputed.
While Mr Loufrani says he came up with the image in 1968, American Harvey Ball contends that he first designed the logo in 1963.
Mr Ball, a Massachusetts graphic artist, claims he devised the cartoon to cheer up disgruntled staff at a newly merged insurance firm.
Another American, Seattle-based advertiser David Stern, also claims to have invented the image.
Mr Sterns says he devised the sign in 1967 as part of an advertisement campaign for financial services firm Washington Mutual.
Both Mr Ball and Mr Stern further say that they did not think of trademarking the image at the time.
Since the 1970s, the smiley face has been adopted by a number of different groups.
It appears on number plates in the US state of Kentucky, has featured on an American postage stamp and was the unofficial symbol of the late 1980s acid house dance music movement.
The image was also spoofed in the 1994 movie Forest Gump, in which the title character inadvertently comes up with the logo by rubbing his wet and dirty face on a white T-shirt.