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a friend of mine has an upholstery business, and his company used the initials b.m.w. in his company name. he got a C&D from them also, and had to change his company name. although his was a bit more of a straight forward case than his.
although it seems like a frivolous claim they are making with you, i think you would be crazy to try and fight someone like bmw, milk it for short term publicity and then comply with there request, it will only cost you a lot of money in the long term if you don't.
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