This is not legal advice, but I don't recommend waiting until a suit is filed. Hiring counsel early and figuring out how to respond to the initial notice can be important: it might keep the courts out of the dispute altogether (especially if the other side is on very weak grounds) and might increase the settlement amount (if any) should OP choose to settle and transfer the domain.

There's more to this issue than just the naked law and legal procedure. Context matters, and experienced lawyers help you navigate situations. They're called "counsel" for a reason. :-)