Jason, if there is no trademark with the US Trademark offices, he cant do anything. also, he would need to have one in the UK too, like i said before, and that is cause trademarks are not global. just per country.so, he really cant do anything. you are worrying way to much. if you want to re-brand anyways, then go for it, since you would do it with or without him buying it, but, if you want to keep it, then do so.
Did you get any answers from him on the solid legal grounds he's basing his demand on?
Personally I think 40 dollars is bit of a joke, basically saying to you - "Here is some pocket money kid. Be a good boy."
40 X 10 and i'd take the deal
However, take into account the amount of time your spending on this issue - is the domain name really worth that amount of time? Think about it - How much do you think your time is worth per hour? then work out how many hours you've spent dealing with this and if the time out weighs the money - get him to up his money as said above x10.
He can sue you if he want's but I doubt he will - the cost to sue someone overseas is very large. It could be a lot of outlay for nothing in return as most judges here would ask for patents or copyrights and without that he'd have a large legal bill and nothing to show for it.
I'd personally sell the domain at x10 of the amount offerred and re-brand, afterall if he's so keen on the domain and is willing to waste his time chasing it i'd make some money like cyber squatters do
I'd accept 10x that but I think by his statement at the start of the e-mail, I doubt he will.
Make the offer, what's the worst he can say? no?
I doubt it would ever goto court.
At least try barter on the price.
You don't need to do anything until he actually gives you a legal notice of the fact that he is taking you to court.
Do you think it will get to that stage though?
That is completely up to him. I can choose to start a law suit against anyone I wanted with or without proof or anything.
But like I said, once he gives you legal notice then you can offer to settle outside of court.
I doubt he will, he's just trying to put the shivers down your spine - why do you think he made you an offer of $40?
It's becoming a bigger issue than it needs to be, Tell him if he wants you to rebrand and co-operate then he has to co-operate also and compensate for time spent developing your brand. $400 or go away.
Then ignore all threats, and wait to see if court papers turn up on your doorstep.