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You should read this entire thread about "TeachBook," which was sued by Facebook: http://news.ycombinator.com/item?id=1633106 In particular, tptacek's comments about PerfumeBay are relevant to your situation. Short version: yes, you should be worried. Even if you are in the clear, legally, you may have to deal with the legal system itself. Being legally vindicated can still be expensive.
You should read this entire thread about "TeachBook," which was sued by Facebook: http://news.ycombinator.com/item?id=1633106 In particular, tptacek's comments about PerfumeBay are relevant to your situation. Short version: yes, you should be worried. Even if you are in the clear, legally, you may have to deal with the legal system itself. Being legally vindicated can still be expensive.
If your domain is like SomethingBay.com and your website do not mimic eBay in any way, you should be safe. But, if your domain sounds likeBay.com, than it could be a problem.
Do not give up your domain this bot named 'Edith'. eBay will have to go through Uniform Domain-Name Dispute-Resolution Policy.
http://www.icann.org/en/udrp/udrp.htm http://www.wipo.int/amc/en/domains/
Wait until you hear from WIPO or your domain registrar about it. Respond them that your website does not mimic eBay and is not related to them in any way.
Most likely, WIPO will favor the decision on your side. It won't cost you anything to go through WIPO's resolution process.
Unlike patents, trademarks have to be actively defended to remain valid. My guess is that companies of this size send out letters like these to maintain that they're indeed defending their trademark. I wouldn't worry about it but still send a reply letting them know why I don't think their trademark applied.
1. It alerts the sender that there may be an interested party on the other side of unknown intentions. This gives them further reason to continue to pursue that they didn't have before.
2. It confirms to the sender that the message was received by a potential defendant. That, then, becomes a piece of the litigation: "Your Honor, over a year ago we sent Mr. So-and-So an email regarding this matter, and he flatly refused to negotiate in good faith with us. Given that... (insert bastardly thing here)."
In short, don't reply, and never reveal your thought process to them except through counsel. And don't pick painful fights (especially inadvertently) for no reason at all. If you feel an overwhelming urge to take some kind of action, talk to a lawyer.
The gist of the answer was that if you were clearly making a play on the word eBay or if people might get them confused, then you have to stop. It doesn't sound like your case, so you are probably in the right, but the next question is how to deal if you want to fight it or ignore it.