valuable domains . . this situation fell in my lap
Hmmm . . What makes your domain "valuable"? Was it always "valuable to the market" (many past inquiries) or just to "personally valuable to you"? $5K sounds like a nice number for a domain that hasn't seen that much type-in activity until the new entity arose . . so I have to wonder just "how generic/descriptive" it is.
One reason I ask is the implicit suggestion of this thread that the domain's value jumped not because of the domain's inherent value (everybody wants it) or "its domain-time coming" (witness recent 3D domain frenzy), but because of the traffic value of your domain "as a typo". So, implicitly, this thread is about how to best profit from a domain whose value arises from its typo-traffic potential.
Does that type of thinking make you a bit like the brand-typo traffic guy? The guy that perhaps very few find likable?
Maybe. Maybe not.
Does the 1 letter difference "make sense", i.e., your domain is a generic, descriptive phrase that stands alone and their website name - with a 1 letter difference - also "makes sense" - except with a different meaning, intent, effort to brand-to-meaning? Money vs. Monet?
Can you build something with an entirely different, yet genuinely related to your domain meaning and context, on your domain?
Have they filed for TM protection? How sweeping an application? Facebook, for instance, appears ready to challenge every domain that mentions "book". Argh. (Hey, it's just investor's money. More lawyers! More lawyering!)
You might/do realize that, in engaging with the typo-traffic buying entity "in this case" you are, at least arguably, evidencing a willingness to make a deal with a true cybersquatter ? That perhaps makes you "of the same ilk": he does it and you are willing to consider enabling him to do more of it, for the right price.
Now that you have done your research have you ever "affirmatively sent him away"? As in "I do NOT believe in profitting off of errant traffic to my entirely innocent domain!". Such a statement is a double-edged sword, so I'm not saying "say that", but you are in a situation where your past email correspondence could come into play should you get sued, so caution is advised.
This reminds me a bit of the UTube vs YouTube situation. You might want to check into the analysis of those domains.
Lastly, "speaking publicly" about such an issue isn't always the wisest move. For example, an aggressive law firm might start searching for clues about someone's intent or design by searching for posts in domain name forums "that might" relate to the domain/person. As stated in this forum's Charter [webmasterworld.com
SEEKING ADVICE RELATED TO TRADEMARK AND OTHER LEGAL ISSUES:
- Posting domain name details is a violation of the Charter of this forum, yet, such details are what competent legal counsel would insist on knowing before offering advice.
- There are hundreds of jurisdictions, each with their own variation of intellectual property and trademark law.
- Statements made in public forums can and will be used against their maker.
- Trademark holders can search domain forums for threads triggered by their communications. Declaring "I was just contacted by a lawyer about a domain . . " can signal "This thread was started by the person you just called." See #3.
- Money judgments for cybersquatting, trademark violations and other intellectual property wrongs can bankrupt people and companies.
- Threads that involve personal legal or trademark issues inevitably lead to the same conclusion: "We are neither sufficiently qualified by education, nor sufficiently informed of the critical facts, to offer competent, trustworthy, actionable legal advice. Therefore the ONLY sound advice we can offer is TALK TO A LAWYER."
For these and other good reasons, from this point forward [webmasterworld.com], the Domain Forum will no longer host threads related to any individual's or any company's legal issues, especially domain+trademark issues. The only place to seek opinions concerning specific legal matters, such as the ability of any party to assert trademark rights or defend against such a claim, is a law office in the proper jurisdiction.