For the record, Jack Daniels sent us a Cease & Desist recently and it was not nearly as nice as this one. It was your standard "stop doing this or we will take action" C&D. (We had parody t-shirt designs in our user gallery.) A letter like this would've been easier to swallow.
I have come to believe that there are contracts and there are intentions behind the contracts. A person or a company can sign a contract, and have no plans to fulfill it and at the same time a person or a company can fulfill a promise without signing any contract. While contracts are a necessary evil, the real question is what does the other party intend to do.