How to handle Cease and Desist from huge company

I'm wondering what, if anything, my company should do about a cease and desist from a huge company. In a nutshell, we received a letter from a senior attorney to "cease any and all use of the trade name".

I'm also not sure what I can and can't (or shouldn't) say here, so I'm keeping it vague. If it make sense to post all of the details, I will.

The company is saying that our name "is likely to confuse consumers as to the source of your goods or services and suggest some affiliation or relationship with that does not exist". Their name is a part of our name, and our name is two words put together to sound like a third. For example, if they were "OnStar" we would be "OnStartups" (probably a bad example).

Their primary focus is hardware, and ours is SaaS, and I see no overlap whatsoever in our business models.

My business partner (we own the company together) spoke with a lawyer casually (not paying) and was told to ignore the letter, and they send these out all of the time and don't do anything to followup with them.

Is this sound advice? Or should we take this seriously and respond before the deadline (January 30,2012). We don't have a lot of money to spare, but if this is something that will bite us later, I will pay to get it resolved.

Edit: One outstanding question I have, is what's the best/worse that could happen if we do absolutely nothing in response to their letter?

We're both US companies; we're incorporated within the last year with 2 employees, they've been around for close to 50 years and are in the Dow Jones Index.

Unfortunately your question is way too vague, each case is unique. Also you didn't originally say which country you are in.

There are a couple of facts which should be considered (assuming USA):

1) Do they have a federal trademark? You should get a copy on-like for free from the Patent & Trademark Office. They may be bluffing?

2) Does their trademark pre-date your use of your name? If you started using your name before they started using theirs you will most likely have a prior claim and should be able to continue using your name.

3) Assuming they have a federal trademark, and they had the trademark before you stated using your name, then the question is will it likely cause confusion? There is a Cadillac dog food as well as a Cadillac car; this is fine because nobody is likely to confuse dog food for a car.

4) Finally how big is the other company and how well known? If it is McDonalds, CocaCola or Disney who regularly and actively defend their trademarks you should think twice before going up against them.

If after considering the above you still want to keep the rights to your name you should consult with a intellectual property lawyer who regularly handles trademark cases. This is a very specialized field and outside the scope of practice for the average lawyer.

EDIT:

Based upon your comment that this is a letter from a DJ 30 company and that you are presumably much smaller here are a couple of points that may help.

Big companies send out cease and desist letters all the time, usually with virtually no research or merit. You are at a very early stage of the process. Years ago I got such a letter from a firm retained by Microsoft asking me to stop using the name "WinCron" for a piece of freeware I had written. The only time the name had ever appeared in print was in a directory published by Microsoft itself! I simply called up their in-house council (not the firm that sent the letter), pointed out that it was Microsoft, not me , that had published the name and the problem was solved instantly. If you get a good trademark lawyer he may be able to have a similar conversation with the big company an reach an amicable settlement very quickly.

To give you an example of a real case that was handled in just such a fashion there is a small store in Maine Gimbal & Sons, that got just such a letter from Gimbels, the big New York City department store. This similarity, both are stores and have very similar names is probably much closer than yours. They came to terms; remember that most big companies don't want to be know as the big bad guy that runs around ruining people lives and putting people out of work. They too have an incentive to work this out if they can.

Partial answer - do some research on the 'senior attorney'. We've dealt with all sorts of legal letters and crazy contract demands and it turned out to be paralegals or someone acting like an attorney who thought they knew it all.

Years ago these letters were common at the beginning of the year. A new legal person was hired and the first thing they did was fire off lots of letters about infringements. Lots of billable time and looked impressive.

Like any legal action, they can make a claim and you can argue with them or accept it. Unfortunately a large company has resources you don't have. So, you will need to make a decision. But I think to make that decision you will need some legal advice - which also will cost you some money. You need to get your own opinion from your attorney about whether there is likely any merit to their claim and whether you can fight it if you want to. Then you can decide.

Just because they say it violates their trademark, doesn't mean it is so. But you may not be able to afford to fight it.You'll need some advice. Beyond this, I don't think we need any particulars here.