This seems to be a fairly unique situation, (at very least one that companies don't like to talk about). I have a client that has been running an e-Commerce site since 2000, and does a respectable amount of business for a mom n' pop operation, ranking well for some high volume terms (albeit completely unintentional). Recently a company in the same business market has taken legal action, contending that the domain, infringes on trade-marked business name. The offer on the table for a limited time is $10k in cash, $10k in merchandise, and 3.5 years of redirect, sign over the domain and walk away. My question is: does this seem like a fair deal? or is the legal action completely absurd?
You need a real lawyer. With that kind of cash on the table it's definitely worth the money to get real legal counsel. It's also impossible to tell whether they have a chance of winning or not without the name/details etc. Again contact a real lawyer.
Agree with Melog here, especially if the other party is smart enough to scour the 'Net for anything regarding this.
I agree with both Melog and Dave Zan. Don't air your strategy in a public forum that your opponent can find.
it could be reverse-hijacking if your client is not infringing on any trademarks. an attorney is essential as others have expressed here already. keep us posted as to what happens.