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I wouldnt mortage the house yet. I used to get these C&D letters all the time (I got three in one day once, lol) and very few of them ever resulted in a lawsuit being filed. I wouldnt worry about it until the process server shows up.
Home Depot sent me one for a t-shirt I was selling. When I told them to fuck off, they sent me a second C&D a bit more threatening than the first. I told them to fuck off, eat shit and die. The next thing I heard from them was that thier client did not wish to pursue the matter and they were closing thier file.
Most of the threats you recive by mail are empty and should be ignored until you have a process server on your door. And unless they can prove actual damages, they arent gonna get $900K because Lanham limits puntive damages to $100K (I think thats the amount) when materials are removed voluntarily after being warned.
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