How should a domain owner respond if they are contacted by the lawyers of a company who owns the trademark on a name which is contained in the domain?

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tynamite

As long as you can prove that you are using the domains for a legitimate and purposeful reason, and not to gain reputation off Yahoo! and Flickr's name, you can legally keep the domains. Go and lookup Verisign's dispute pages.

Seeing as you didn't use the domains for anything, you will lose those
domains. That's why Apple got to get itunes.com off someone else but
couldn't get apple.co.uk