The Magnolia trademark hasn't been issued to Magnolia Systems yet. It's only been published for opposition. Which means if the gnolia.com crew have been using

The Magnolia trademark hasn't been issued to Magnolia Systems yet. It's only been published for opposition. Which means if the gnolia.com crew have been using the mark in commerce before March, 2006, they can file an opposition claim. The whole cease and desist letter is bogus until the trademark has been approved. However, if gnolia.com doesn't oppose the trademark claim now, before it's approved, then it's an uphill battle if the other company decides to sue. Note Magnolia Systems is filing under multiple subsections - the only one you care about is the online commerce section. They can have all the others.