[jridgway]

Agreed. They're just trying to bully you out of the domain.

Anecdote: A co-worker owned a domain www.furrytown.com back in the 90s (a pet lovers site, not the other thing...). Mattel was planning on launching a big toy line called Furry Town, and sent him similar letters to the one you've received telling him he should just give up the site or else face legal action. They claimed he had just scooped the domain up after he "saw it was copyrighted" by Mattel (of course he had no idea they were doing this before they sent the letters).

Well, he wasn't bullied by them, and just held his ground and told them they could try to prove it if they wanted, but he wouldn't just give up the domain. After a week or so they email him asking him what it would take for him to give them the rights to the domain. He said $10,000 dollars, and he received a check in the mail 10 days later.

Moral: Don't get bullied by a big company with no grounds for their claims.

[Spoom]

He's lucky. If I remember correctly, Microsoft did something similar a while back, asking how much it would take to transfer a domain they considered infringing to them. Upon receiving the reply, they turned around and claimed the guy was squatting on the domain for profit and obtained the domain through ICANN's dispute resolution process for free.