You have 2 options:
1) Go behind their back and when you get the cease and desist letter stop all activity and maybe sell them the domain (they won't sue you right away because the costs of a trial are important)
2) Try to JV with them, maybe sign a partnership contract. I've done this in the past with several companies and it worked like a charm every time, if you address the issue and make the proposal in the right way, they'll accept because they have nothing to lose, more profits for them.
If you need any help shoot me a PM.