Sounds like you didn't apply for a trademark, did the other guy? You can do a trademark search here:
http://tess2.uspto.gov/bin/gate.exe?f=searchss&state=400...Either way, if the other guy is running a legitimate business AND received a trademark, he'll probably be able to force you to hand those over. That may be true a little longer down the line even if he doesn't hold the trademark.
If you don't have any investment (other than the $7 or so), selling to them for a reasonable (whatever that means) price is probably the most useful course for both sides.
