[jayturley]

In my experience, people who threaten to get the police involved usually won't. It's usually a threat to cause the exact type of response you are considering - just giving in. The only situation I can think of where they might have a chance is if the customer never used your software after purchasing it. If you have usage data that shows the customer continued using it after purchase, and a communication history that shows no refund was ever asked for, you will likely be okay even if they somehow get this to court. Please note: I am not a lawyer and I am US-based, so this advice may not be useful depending on your location and the legal rules in your country.