IF you guys are determined to keep your name, I would highly urge you to go and see an IP Attorney. I work at a Firm that deals with this kind of stuff all day and are one of the biggest firms doing this thing in Aus.
Just give one a call and explain the situation and the Lawyer will be able to map this out for you and advise on outcomes if proceeding are taken to quash the threats and future action, or advise on what it may cost to fight it all those kinds of things. I would imagine an initial meeting and product search to cost no more than a couple of hundred. Then you can take the necessary course of action that you think would be best for your brand.
Yeah mate Russ has made inquiries in this direction but has deciced it's not worth it for a name no one likes anyway ....so we are moving on and renaming ... he has it narrowed down to a few contenders and as most didn't seem to like the name it would seem they've done him a favour ... because the new name will reflect the company better.
Muddy not much more than stickerkits are needed as there is no branding on the cases ... and we can sort logo's etc so no biggy ....The legal battle was gunna cost alot more than that .
So I'll let ya's know when the decision is made