Blatant TM, they obviously know what they are talking about with that letter and they know the law, I say just give it up.
However there is the chance that they simply send letters like that out as a scare tactic and don't actually follow it up with anything - I don't see much harm in letting those five calendar days lapse and waiting until they contact you again with a more stiffly worded letter. You could always say you never got the first one or hadn't had a chance to read it yet.
In the end though, I'd say just give up the name(s).
Quite generous of them. Consider yourself really lucky.
It's not that generous. What is his outlay? $80? Nike's laywers probably charge Nike that every 15 minutes. Cheaper for them to pay the $80 than to spend another hour arguing on the phone with him, sending out more letters etc. And they probably assume TM-squatters don't have many assets to go after so suing him is pointless. Smart business decision on their part, but I wouldn't call it generous. In fact I think he might have been able to get them to pay him something on top of his costs for his troubles.