I have seen it many times.  A company grows from the kitchen table to a storefront and builds a successful enterprise.  The owner sweats and toils for years to build brand awareness and goodwill.  Things are finally gaining momentum for the once struggling business and they feel they are about to “make it”.  Then they get a registered letter from a law firm in a different state demanding that they stop using their own business name, tear down their signs, rip up their business cards, and start over.  The law firm claims that another business actually owns the right to the name and demands that the small company cease and desist using their name immediately, and that they might sue for damage!  Can they do that?

Yes, they can in certain circumstances if they have a priority trademark registration.  And you should make sure that you are on the side of the one sending the letter, not the one receiving it.